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 September 29, 201927, 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 Island02861
(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 growth 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 October 18, 201926, 2020 was 126,253,142.

137,030,619.




PART I. FINANCIAL INFORMATION
Item 1.    Financial Statements.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands of Dollars Except Share Data)
(Unaudited)
September 29,
2019		 September 30,
2018		 December 30,
2018		September 27,
2020		September 29,
2019		December 29,
2019
ASSETS     ASSETS
Current assets     Current assets
Cash and cash equivalents$1,060,432
 907,107
 1,182,371
Accounts receivable, less allowance for doubtful accounts of $18,200
$96,000 and $9,100
1,416,879
 1,391,242
 1,188,052
Cash and cash equivalents including restricted cash of $71,200, $0 and $0Cash and cash equivalents including restricted cash of $71,200, $0 and $0$1,132,405 1,060,432 4,580,369 
Accounts receivable, less allowance for doubtful accounts of $23,700
$18,200 and $17,200
Accounts receivable, less allowance for doubtful accounts of $23,700
$18,200 and $17,200
1,438,360 1,416,879 1,410,597 
Inventories589,132
 610,918
 443,383
Inventories540,039 589,132 446,105 
Prepaid expenses and other current assets346,687
 283,183
 268,698
Prepaid expenses and other current assets648,158 346,687 310,450 
Total current assets3,413,130
 3,192,450
 3,082,504
Total current assets3,758,962 3,413,130 6,747,521 
Property, plant and equipment, less accumulated depreciation of $496,700
$452,000 and $462,700
371,881
 255,150
 256,473
Property, plant and equipment, less accumulated depreciation of $546,800
$496,700 and $505,900
Property, plant and equipment, less accumulated depreciation of $546,800
$496,700 and $505,900
477,154 371,881 382,248 
Other assets     Other assets
Goodwill485,042
 572,387
 485,881
Goodwill3,644,118 485,042 494,584 
Other intangible assets, net of accumulated amortization of $771,700
$924,700 and $721,700
658,350
 732,235
 693,842
Other intangible assets, net of accumulated amortization of $885,800
$771,700 and $783,500
Other intangible assets, net of accumulated amortization of $885,800
$771,700 and $783,500
1,546,810 658,350 646,305 
Other626,221
 743,107
 744,288
Other1,276,133 626,221 584,970 
Total other assets1,769,613
 2,047,729
 1,924,011
Total other assets6,467,061 1,769,613 1,725,859 
Total assets$5,554,624
 5,495,329
 5,262,988
Total assets$10,703,177 5,554,624 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$7,903
 20,307
 9,740
Short-term borrowings$10,032 7,903 503 
Current portion of long-term debtCurrent portion of long-term debt369,269 0 0 
Accounts payable501,136
 458,808
 333,521
Accounts payable466,172 501,136 343,927 
Accrued liabilities957,696
 842,808
 931,063
Accrued liabilities1,470,076 957,696 912,652 
Total current liabilities1,466,735
 1,321,923
 1,274,324
Total current liabilities2,315,549 1,466,735 1,257,082 
Long-term debt1,696,204
 1,694,721
 1,695,092
Long-term debt4,777,807 1,696,204 4,046,457 
Other liabilities550,778
 591,404
 539,086
Other liabilities778,514 550,778 556,559 
Total liabilities3,713,717
 3,608,048
 3,508,502
Total liabilities7,871,870 3,713,717 5,860,098 
Redeemable noncontrolling interestsRedeemable noncontrolling interests22,876 0 0 
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 September 29, 2019, September 30, 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 issued0 0 0 
Common stock of $0.50 par value. Authorized 600,000,000 shares; issued 220,286,736 shares at September 27, 2020, 209,694,630 shares at September 29, 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 September 27, 2020, 209,694,630 shares at September 29, 2019, and 220,286,736 shares at December 29, 2019110,143 104,847 110,143 
Additional paid-in capital1,301,366
 1,282,405
 1,275,059
Additional paid-in capital2,311,433 1,301,366 2,275,726 
Retained earnings4,180,331
 4,254,919
 4,184,374
Retained earnings4,192,434 4,180,331 4,354,619 
Accumulated other comprehensive loss(185,376) (296,738) (294,514)Accumulated other comprehensive loss(280,330)(185,376)(184,220)
Treasury stock, at cost; 83,442,005 shares at September 29, 2019; 82,979,119 shares at September 30, 2018; and 83,565,598 shares at December 30, 2018(3,560,261) (3,458,152) (3,515,280)
Treasury stock, at cost; 83,256,622 shares at September 27, 2020; 83,442,005 shares at September 29, 2019; and 83,424,129 shares at December 29, 2019Treasury stock, at cost; 83,256,622 shares at September 27, 2020; 83,442,005 shares at September 29, 2019; and 83,424,129 shares at December 29, 2019(3,559,929)(3,560,261)(3,560,738)
Noncontrolling interestsNoncontrolling interests34,680 0 0 
Total shareholders' equity1,840,907
 1,887,281
 1,754,486
Total shareholders' equity2,808,431 1,840,907 2,995,530 
Total liabilities and shareholders' equity$5,554,624
 5,495,329
 5,262,988
Total liabilities, noncontrolling interests and shareholders' equityTotal liabilities, noncontrolling interests and shareholders' equity$10,703,177 5,554,624 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 Nine Months EndedQuarter EndedNine Months Ended
September 29,
2019		 September 30,
2018		 September 29,
2019		 September 30,
2018		September 27,
2020		September 29,
2019		September 27,
2020		September 29,
2019
Net revenues$1,575,173
 1,569,686
 $3,292,220
 3,190,485
Net revenues$1,776,623 1,575,173 $3,742,472 3,292,220 
Costs and expenses:       Costs and expenses:
Cost of sales627,119
 655,597
 1,230,800
 1,249,090
Cost of sales610,105 627,119 1,126,044 1,230,800 
Program cost amortizationProgram cost amortization85,424 28,028 268,245 58,105 
Royalties128,008
 105,265
 258,957
 240,962
Royalties176,938 128,008 387,097 258,957 
Product development67,354
 65,807
 189,246
 183,050
Product development62,709 67,354 174,863 189,246 
Advertising140,256
 134,384
 309,659
 290,001
Advertising137,408 140,256 311,415 309,659 
Amortization of intangibles11,814
 8,841
 35,445
 19,873
Amortization of intangibles36,172 11,814 107,685 35,445 
Program production cost amortization28,028
 14,088
 58,105
 33,419
Selling, distribution and administration275,384
 272,368
 748,338
 853,585
Selling, distribution and administration325,360 275,384 885,680 748,338 
Acquisition and related costsAcquisition and related costs5,949 0 165,993 0 
Total costs and expenses1,277,963
 1,256,350
 2,830,550
 2,869,980
Total costs and expenses1,440,065 1,277,963 3,427,022 2,830,550 
Operating profit297,210
 313,336
 461,670
 320,505
Operating profit336,558 297,210 315,450 461,670 
Non-operating (income) expense:       
Non-operating expense (income):Non-operating expense (income):
Interest expense22,764
 22,779
 67,096
 68,391
Interest expense49,400 22,764 153,702 67,096 
Interest income(5,485) (4,671) (19,164) (17,227)Interest income(713)(5,486)(6,411)(19,164)
Other expense (income), net20,185
 (566) 118,289
 (6,189)
Other (income) expense, netOther (income) expense, net(11,327)20,186 (15,429)118,289 
Total non-operating expense, net37,464
 17,542
 166,221
 44,975
Total non-operating expense, net37,360 37,464 131,862 166,221 
Earnings before income taxes259,746
 295,794
 295,449
 275,530
Earnings before income taxes299,198 259,746 183,588 295,449 
Income tax expense46,797
 31,933
 42,340
 63,862
Income tax expense79,215 46,797 64,313 42,340 
Net earnings$212,949
 263,861
 $253,109
 211,668
Net earnings219,983 212,949 119,275 253,109 
Net earnings (loss) attributable to noncontrolling interestsNet earnings (loss) attributable to noncontrolling interests(915)0 1,929 0 
Net earnings attributable to Hasbro, Inc.Net earnings attributable to Hasbro, Inc.$220,898 212,949 $117,346 253,109 
       
Net earnings per common share:       Net earnings per common share:
Basic$1.68
 2.08
 $2.00
 1.68
Basic$1.61 1.68 $0.86 2.00 
Diluted$1.67
 2.06
 $1.99
 1.67
Diluted$1.61 1.67 $0.85 1.99 
Cash dividends declared per common share$0.68
 0.63
 $2.04
 1.89
Cash dividends declared per common share$0.68 0.68 $2.04 2.04 
See accompanying condensed notes to consolidated financial statements.





HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Earnings (Loss)
(Thousands of Dollars)
(Unaudited)
Quarter Ended Nine Months EndedQuarter EndedNine Months Ended
September 29,
2019		 September 30,
2018		 September 29,
2019		 September 30,
2018		September 27,
2020		September 29,
2019		September 27,
2020		September 29,
2019
Net earnings$212,949
 263,861
 $253,109
 211,668
Net earnings$219,983 212,949 $119,275 253,109 
Other comprehensive earnings:       
Foreign currency translation adjustments(16,447) (6,762) (6,120) (44,560)
Other comprehensive earnings (losses):Other comprehensive earnings (losses):
Foreign currency translation adjustments, net of taxForeign currency translation adjustments, net of tax40,821 (16,447)(98,144)(6,120)
Unrealized holding (losses) gains on available-for-sale securities, net of tax(155) (617) 400
 (673)Unrealized holding (losses) gains on available-for-sale securities, net of tax(809)(155)1,315 400 
Net gains on cash flow hedging activities, net of tax9,514
 5,323
 14,027
 23,765
Net (losses) gains on cash flow hedging activities, net of taxNet (losses) gains on cash flow hedging activities, net of tax(5,655)9,514 15,670 14,027 
Changes in unrecognized pension amounts, net of tax—
 —
 19,589
 (26,058)Changes in unrecognized pension amounts, net of tax0 0 0 19,589 
Reclassifications to earnings, net of tax:       Reclassifications to earnings, net of tax:
Net (gains) losses on cash flow hedging activities(5,392) (1,672) (10,188) 5,318
Net gains on cash flow hedging activitiesNet gains on cash flow hedging activities(6,833)(5,392)(15,775)(10,188)
Amortization of unrecognized pension and postretirement amounts279
 2,066
 5,578
 6,398
Amortization of unrecognized pension and postretirement amounts274 279 824 5,578 
Settlement of U.S. defined benefit plan—
 —
 85,852
 —
Settlement of U.S. defined benefit plan0 0 0 85,852 
Total other comprehensive earnings (loss), net of tax(12,201) (1,662) 109,138
 (35,810)Total other comprehensive earnings (loss), net of tax27,798 (12,201)(96,110)109,138 
Comprehensive earnings$200,748
 262,199
 $362,247
 175,858
Total comprehensive earnings (loss) attributable to noncontrolling interestsTotal comprehensive earnings (loss) attributable to noncontrolling interests(915)0 1,929 0 
Total comprehensive earnings attributable to Hasbro, Inc.Total comprehensive earnings attributable to Hasbro, Inc.$248,696 200,748 $21,236 362,247 
See accompanying condensed notes to consolidated financial statements.





HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Thousands of Dollars)
(Unaudited)
Nine Months EndedNine Months Ended
September 29,
2019		 September 30,
2018		September 27,
2020		September 29,
2019
Cash flows from operating activities:   Cash flows from operating activities:
Net earnings$253,109
 211,668
Net earnings$119,275 253,109 
Adjustments to reconcile net earnings to net cash provided by operating activities:   Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation of plant and equipment101,016
 104,915
Depreciation of plant and equipment94,100 101,016 
Amortization of intangibles35,445
 19,873
Amortization of intangibles107,685 35,445 
Program production cost amortization58,105
 33,419
Asset impairmentsAsset impairments40,878 0 
Program cost amortizationProgram cost amortization268,245 58,105 
Deferred income taxes(27,974) (7,189)Deferred income taxes12,549 (27,974)
Stock-based compensation24,787
 35,823
Stock-based compensation40,015 24,787 
Non-cash pension settlement110,777
 —
Non-cash pension settlement0 110,777 
Other non-cash items13,347
 (12,124)Other non-cash items(1,646)13,347 
Change in operating assets and liabilities net of acquired balances:   Change in operating assets and liabilities net of acquired balances:
Increase in accounts receivable(236,010) (9,252)
Decrease (increase) in accounts receivableDecrease (increase) in accounts receivable165,593 (236,010)
Increase in inventories(154,476) (197,253)Increase in inventories(96,907)(154,476)
Decrease (increase) in prepaid expenses and other current assets2,440
 (52,005)
Program production costs, net of tax rebates received(43,857) (95,724)
(Increase) decrease in prepaid expenses and other current assets(Increase) decrease in prepaid expenses and other current assets(10,007)2,440 
Program spend, netProgram spend, net(294,597)(43,857)
Increase in accounts payable and accrued liabilities236,777
 124,755
Increase in accounts payable and accrued liabilities18,980 236,777 
Change in net deemed repatriation tax(14,550) 18,074
Change in net deemed repatriation tax(18,364)(14,550)
Other30,632
 (234)Other48,511 30,632 
Net cash provided by operating activities389,568
 174,746
Net cash provided by operating activities494,310 389,568 
Cash flows from investing activities:   Cash flows from investing activities:
Additions to property, plant and equipment(90,800) (104,015)Additions to property, plant and equipment(92,059)(90,800)
Acquisitions—
 (155,451)
Acquisitions, net of cash acquiredAcquisitions, net of cash acquired(4,403,929)0 
Other4,340
 8,587
Other24,297 4,340 
Net cash utilized by investing activities(86,460) (250,879)Net cash utilized by investing activities(4,471,691)(86,460)
Cash flows from financing activities:   Cash flows from financing activities:
Net repayments of other short-term borrowings(1,425) (131,629)
Proceeds from borrowings with maturity greater than three monthsProceeds from borrowings with maturity greater than three months1,036,037 0 
Repayments of borrowings with maturity greater than three monthsRepayments of borrowings with maturity greater than three months(147,324)0 
Net proceeds from other short-term borrowingsNet proceeds from other short-term borrowings(319)(1,425)
Purchases of common stock(60,137) (187,850)Purchases of common stock0 (60,137)
Stock-based compensation transactions29,737
 28,827
Stock-based compensation transactions1,830 29,737 
Dividends paid(250,760) (229,562)Dividends paid(279,423)(250,760)
Payments related to tax withholding for share-based compensation(13,061) (58,336)Payments related to tax withholding for share-based compensation(5,935)(13,061)
Redemption of equity instrumentsRedemption of equity instruments(47,399)0 
Deferred acquisition payments(100,000) —
Deferred acquisition payments0 (100,000)
Debt acquisition costs(21,534) —
Debt acquisition costs0 (21,534)
Net cash utilized by financing activities(417,180) (578,550)
OtherOther(6,949)0 
Net cash provided (utilized) by financing activitiesNet cash provided (utilized) by financing activities550,518 (417,180)
Effect of exchange rate changes on cash(7,867) (19,444)Effect of exchange rate changes on cash(21,101)(7,867)
Decrease in cash and cash equivalents(121,939) (674,127)
Cash and cash equivalents at beginning of year1,182,371
 1,581,234
Cash and cash equivalents at end of period$1,060,432
 907,107
Decrease in cash, cash equivalents and restricted cashDecrease in cash, cash equivalents and restricted cash(3,447,964)(121,939)
Cash, cash equivalents and restricted cash at beginning of yearCash, cash equivalents and restricted cash at beginning of year4,580,369 1,182,371 
Cash, cash equivalents and restricted cash at end of periodCash, cash equivalents and restricted cash at end of period$1,132,405 1,060,432 
   
Supplemental information   Supplemental information
Cash paid during the period for:   Cash paid during the period for:
Interest$69,601
 69,603
Interest$123,595 69,601 
Income taxes$64,917
 87,704
Income taxes$66,008 64,917 
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 September 27, 2020
Quarter Ended September 29, 2019
Common
Stock		Additional
Paid-in Capital		Retained
Earnings		Accumulated Other
Comprehensive  Loss		Treasury
Stock		Noncontrolling InterestsTotal
Shareholders'
Equity		Redeemable Noncontrolling Interests
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 
Net earnings attributable to Hasbro, Inc.Net earnings attributable to Hasbro, Inc.— — 220,898 — — — 220,898 — 
Net loss attributable to noncontrolling interestsNet loss attributable to noncontrolling interests— — — — — (901)(901)(14)
Buyout of noncontrolling interestBuyout of noncontrolling interest— 606 — — — — 606 — 
Other comprehensive earningsOther comprehensive earnings— — — 27,798 — — 27,798 — 
Stock-based compensation transactionsStock-based compensation transactions— (325)— — 61 — (264)— 
Stock-based compensation expenseStock-based compensation expense— 13,885 0 — 0 — 13,885 — 
Dividends declaredDividends declared— — (93,179)— — 0 (93,179)— 
Distributions paid to noncontrolling owners and other foreign exchangeDistributions paid to noncontrolling owners and other foreign exchange— — — — — (2,563)(2,563)(1,243)
Balance, September 27, 2020Balance, September 27, 2020$110,143 2,311,433 4,192,434 (280,330)(3,559,929)34,680 $2,808,431 $22,876 
Quarter Ended September 29, 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, 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)0 $1,715,869 $0 
Net earnings—
 —
 212,949
 —
 —
 212,949
Net earnings— — 212,949 — — — 212,949 — 
Other comprehensive loss—
 —
 —
 (12,201) —
 (12,201)Other comprehensive loss— — — (12,201)— — (12,201)— 
Stock-based compensation transactions—
 1,933
 —
 —
 852
 2,785
Stock-based compensation transactions— 1,933 — — 852 — 2,785 — 
Purchases of common stock—
 —
 —
 —
 (1,504) (1,504)Purchases of common stock— — — — (1,504)— (1,504)— 
Stock-based compensation expense—
 8,893
 —
 —
 —
 8,893
Stock-based compensation expense— 8,893 — — 0 — 8,893 — 
Dividends declared—
 —
 (85,884) —
 —
 (85,884)Dividends declared— — (85,884)— — — (85,884)— 
Balance, September 29, 2019$104,847
 1,301,366
 4,180,331
 (185,376) (3,560,261) $1,840,907
Balance, September 29, 2019$104,847 1,301,366 4,180,331 (185,376)(3,560,261)0 $1,840,907 $0 
Quarter Ended September 30, 2018
Common
Stock
 
Additional
Paid-in Capital
 
Retained
Earnings
 
Accumulated Other
Comprehensive  
Loss
 
Treasury
Stock
 
Total
Shareholders'
Equity
Balance, July 1, 2018104,847
 1,263,657
 4,070,661
 (295,076) (3,377,339) 1,766,750
Net earnings—
 —
 263,861
 —
 —
 263,861
Issuance of shares for Saban purchase—
 —
 —
 —
 —
 —
Other comprehensive loss—
 —
 —
 (1,662) —
 (1,662)
Stock-based compensation transactions—
 6,470
 —
 —
 (1,358) 5,112
Purchases of common stock—
 —
 —
 —
 (79,455) (79,455)
Stock-based compensation expense—
 12,278
 —
 —
 —
 12,278
Dividends declared—
 —
 (79,603) —
 —
 (79,603)
Balance, September 30, 2018$104,847
 $1,282,405
 $4,254,919
 $(296,738) $(3,458,152) $1,887,281
See accompanying condensed notes to consolidated financial statements.












HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity and Redeemable Noncontrolling Interests
(Thousands of Dollars)
Nine Months Ended September 29, 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—
 —
 253,109
 —
 —
 253,109
Other comprehensive earnings—
 —
 —
 109,138
 —
 109,138
Stock-based compensation transactions—
 1,756
 —
 —
 14,920
 16,676
Purchases of common stock—
 —
 —
 —
 (60,137) (60,137)
Stock-based compensation expense—
 24,551
 —
 —
 236
 24,787
Dividends declared—
 —
 (257,152) —
 —
 (257,152)
Balance, September 29, 2019$104,847
 1,301,366
 4,180,331
 (185,376) (3,560,261) $1,840,907
 
Nine Months Ended September 30, 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—
 —
 211,668
 —
 —
 211,668
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 loss—
 —
 —
 (35,810) —
 (35,810)
Stock-based compensation transactions—
 (2,660) —
 —
 (1,272) (3,932)
Purchases of common stock—
 —
 —
 —
 (192,348) (192,348)
Stock-based compensation expense—
 35,607
 —
 —
 216
 35,823
Dividends declared—
 —
 (238,474) —
 —
 (238,474)
Balance, September 30, 2018$104,847
 $1,282,405
 $4,254,919
 $(296,738) $(3,458,152) $1,887,281
(Unaudited)
Nine Months Ended September 27, 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)0 $2,995,530 $0 
Noncontrolling interests related to acquisition of Entertainment One Ltd.— — — — — 38,561 38,561 26,241 
Net earnings attributable to Hasbro, Inc.— — 117,346 — — — 117,346 
Net earnings (loss) attributable to noncontrolling interests— — — — — 2,067 2,067 (138)
Buyout of noncontrolling interest— 606 — — — — 606 — 
Other comprehensive loss— — — (96,110)— — (96,110)— 
Stock-based compensation transactions— (4,613)— — 508 — (4,105)— 
Stock-based compensation expense— 39,714 — — 301 — 40,015 — 
Dividends declared— — (279,531)— — — (279,531)— 
Distributions paid to noncontrolling owners and other foreign exchange— — — — — (5,948)(5,948)(3,227)
Balance, September 27, 2020$110,143 2,311,433 4,192,434 (280,330)(3,559,929)34,680 $2,808,431 $22,876 
 Nine Months Ended September 29, 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)0 $1,754,486 $0 
Net earnings— — 253,109 — — — 253,109 — 
Other comprehensive earnings— — — 109,138 — — 109,138 — 
Stock-based compensation transactions— 1,756 — — 14,920 — 16,676 — 
Purchases of common stock— — — — (60,137)— (60,137)— 
Stock-based compensation expense— 24,551 — — 236 — 24,787 — 
Dividends declared— — (257,152)— — — (257,152)— 
Balance, September 29, 2019$104,847 1,301,366 4,180,331 (185,376)(3,560,261)0 $1,840,907 $0 
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 September 29, 201927, 2020 and September 30, 2018,29, 2019, 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 September 29, 201927, 2020 and September 30, 201829, 2019 were each 13-week periods. The nine monthnine-month periods ended September 29, 201927, 2020 and September 30, 201829, 2019 were each 39-week periods.
The results of operations for the quarter and nine month periods ended September 29, 201927, 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.


Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
Noncontrolling Interests
The financial results and position of the noncontrolling interests acquired through the acquisition of eOne are included in their entirety in the Company’s consolidated statements of operations and consolidated balance sheets beginning with the first quarter of 2020. The value of the redeemable noncontrolling interests is presented in the consolidated balance sheets as temporary equity between liabilities and shareholders' equity. The value of the non-redeemable noncontrolling interests is presented in the consolidated balance sheets within total shareholders' equity. Earnings (losses) attributable to the redeemable noncontrolling interests and non-redeemable noncontrolling interests are presented as a separate line on the consolidated statements of operations which is necessary to identify those earnings (losses) specifically attributable to Hasbro. A breakout of the redeemable noncontrolling interests and non-redeemable 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 Limited (1)
England and WalesRedeemable100 %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
(1) During the third quarter of 2020, Entertainment One U.K. Holdings Ltd., a subsidiary of the Company, acquired the remaining 30% of Whizz Kid Entertainment Limited, making it a wholly owned affiliate of the Company.

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 September 27, 2020, $71,194 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").  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 ("20182019 Form 10-K"), which includes all such information and disclosures and, accordingly, should be read in conjunction with the financial information included herein.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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") 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 iswas permitted. The Company expects to adoptadopted the standard atin the startfirst quarter of fiscal year 2020 and is currently evaluatingthe adoption of the standard and thedid not have a material impact if any, toon its consolidated financial statements.
Recent EventsRecently Issued Accounting Pronouncements
OnIn August 22, 2019,2018, the Company and Entertainment One Ltd. ("eOne") entered into a definitive agreement under which the Company will acquire all of the outstanding shares of stock of eOne in an all-cash transaction valued at approximately £3,300,000, or $4,000,000 based on exchange rates on the agreement date. Under the terms of the agreement, eOne shareholders will receive £5.60 in cash for each common share of eOne. The Company hedged a portion of its exposure to fluctuations in the British pound sterling in relationFASB 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 acquisition purchase price using a series of both foreign exchange forwardDisclosure 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 option contracts. These contracts doearly adoption is permitted. The standard relates to financial statement disclosure only and will not qualify for hedge accounting and as such, were marked to market through the Company's Consolidated Statement of Operations. The Company recorded after-tax losses of $25,533have an impact on these instruments to other (income) expense, net for the quarter and nine month periods ended September 29, 2019. See Note 9, Derivative Financial Instruments for further details.
The Company expects to finance the transaction with a combination of debt and equity financing. On August 22, 2019, the Company entered into a debt commitment letter with Bank of America, N.A. ("BofA") and BofA Securities Inc., pursuant to which BofA (and certain of its affiliates) committed to provide a 364-day senior unsecured bridge loan facility in an aggregate principal amount of up to £3,600,000 to provide funding of the purchase price. Costs associated with the Bridge Facility in the amount of approximately $19,000 are being capitalized and are included in prepaid expenses and other current assets in the Company's consolidated balance sheets. statement of financial position, statements of operations and comprehensive earnings (loss) or statement of cash flows.
In addition, on September 20, 2019,March 2020, the Company entered into a Term Loan Agreement (the "Term Loan Agreement") with Bank of America, N.A., as administrative agent andFASB issued Accounting Standards Update No. 2020-04 (ASU 2020-04) Reference Rate Reform (Topic 848): certain financial institutions, as lenders, pursuant to which such lenders committed to provide, contingent upon the completionFacilitation of the acquisitionEffects 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 customary conditionsinterbank offered rates. An entity may elect 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 withapply the Three-Year Tranche,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 "Term Loan Facilities"). Borrowings under the Term Loan Facilities will be used to pay a portionimpact of the cash consideration and other amounts payable in connection with the Company’s acquisition of eOne.
The transaction, which is structured as a statutory plan of arrangement under the Canada Business Corporations Act, remains subject to receipt of certain regulatory approvals and other customary closing conditions. The transaction has received approval by eOne’s shareholders as well early termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act in the U.S. and antitrust approval in Germany. On October 17, 2019 the shareholders of eOne approved the transaction. The transaction is expected to close during the fourth quarter of 2019.
During the third quarter of 2019, the Company also entered into a second amended and restated revolving credit agreement with BofA, as administrative agent, swing line lender and a letter of credit issuer and certain other financial institutions, as lenders thereto (the "Revolving Credit Agreement"), which provides the Company with commitments having a maximum aggregate principal amount of $1,500,000, comprised of (1) $1,100,000 of commitments effective as of September 20, 2019,



and (2) $400,000 of commitments that may become effective upon completion of the acquisition of eOne. The 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 Revolving Credit Agreement also provides for a potential additional incremental commitment increase of up to $500,000 subject to agreement of the lenders. Priorstandard to the September 2019 amendment, the Revolving Credit Agreement provided for a $1,100,000 revolving credit facility. The Company was in compliance with all covenants as of and for the quarter ended September 29, 2019. The Company had 0 borrowings outstanding under its committed revolving credit facility as of September 29, 2019.Company'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.


Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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 $46,768, $43,653, and $50,759 as of September 29, 2019, September 30, 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 nine months ended September 29, 2019 and September 30, 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 September 27, 2020 and September 29, 2019, September 30, 2018 and December 30, 2018, thesethe Company had the following contract assets were $48,357, $33,167 and liabilities in its consolidated balance sheets:
September 27, 2020September 29, 2019
Assets
     Contract assets - current$271,786 32,199 
     Contract assets - long term84,892 12,802 
           Total$356,678 45,001 
Liabilities
     Contract liabilities - current$147,554 48,465 
     Contract liabilities - long term17,872 8,423 
          Total$165,426 56,888 

$18,166, respectively,
In connection with the Company’s acquisition of eOne, the Company acquired $283,329 of contract assets, of which $34,033, $28,477 and $12,895, respectively,$232,184 were recorded in Prepaid Expenses and Other Current Assets and $14,324, $4,690 and $5,271, respectively,$51,145 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 nine months ended September 27, 2020, the Company recognized all revenues related to the acquired current contract liabilities.

Contract assets and liabilities attributable to eOne represent approximately 80% and 56% of total contract asset balances and total contract liability balances, respectively, as Other Long-Term Assets.of September 27, 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 45 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.


Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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 impacting the assets acquired, liabilities assumed and the related allocation thereof, 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 first nine months 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.


Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
The following table summarizes our preliminary allocation of the December 30, 2019 eOne purchase price (in thousands of dollars), as adjusted during the first nine months of 2020:
Initial Estimated Fair ValueMeasurement Period AdjustmentsUpdated Estimated Fair Value
Cash, cash equivalents and restricted cash$183,713 $0 $183,713 
Accounts receivable, net259,061 36,093 295,154 
Inventories7,029 0 7,029 
Other current assets286,270 (570)285,700 
Property, plant and equipment (including right of use assets)90,339 35,333 125,672 
Intangible assets1,055,249 751 1,056,000 
Content assets - IIC and IIP751,524 (140,234)611,290 
Other assets183,209 (93,490)89,719 
Short-term borrowings(11,011)0 (11,011)
Current portion of long-term debt(60,533)(55,267)(115,800)
Accounts payable, and accrued liabilities(761,086)58,344 (702,742)
Long-term debt(149,118)55,267 (93,851)
Other liabilities(262,644)34,878 (227,766)
Noncontrolling interests(63,541)(1,261)(64,802)
Estimated fair value of net assets acquired1,508,461 (70,156)1,438,305 
Goodwill3,079,181 70,156 3,149,337 
Total purchase price$4,587,642 $0 $4,587,642 
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 $3,149,337 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 acquisition will not be amortized for financial reporting purposes and will not be deductible for federal tax purposes.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)

Changes in the carrying amount of goodwill, by operating segment, for the quarter and nine months ended September 27, 2020 is as follows:

Nine Months Ended September 27, 2020
(in thousands of dollars)U.S and CanadaInternationalEntertainment, Licensing and DigitaleOneTotal
Balance at December 29, 2019$291,577 170,218 32,789 0 $494,584 
Acquired during the period0 0 0 3,079,181 3,079,181 
Measurement period adjustments0 0 0 70,156 70,156 
Foreign exchange translation0 188 9 0 197 
Balance at September 27, 2020$291,577 170,406 32,798 3,149,337 $3,644,118 
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 nine months ended September 27, 2020 (in thousands of dollars).
Quarter EndedNine Months Ended
September 27, 2020September 27, 2020
eOne:
Net revenues$193,474 $696,889 
Loss before income taxes(30,793)(75,441)

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
For the quarter and nine months ended September 27, 2020 the Company incurred $5,949 and $165,993, respectively, of charges related to the eOne Acquisition, which are recorded in acquisition and related costs within the Company’s Consolidated Statement of Operations.
The acquisition and related costs for the quarter and nine months ended September 27, 2020 consisted of the following:
•Acquisition and integration costs of $4,599 and $104,283 for the quarter and nine months ended September 27, 2020, respectively, including, for the nine months ended September 27, 2020, $47,399 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 $1,350 and $61,710 for the quarter and nine months ended September 27, 2020, respectively, including severance and retention costs for the quarter and nine months ended September 27, 2020 of $1,350 and $20,832, respectively, as well as $40,878 in impairment charges for certain definite-lived intangible and production assets for the nine months ended September 27, 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 September 27, 2020, all acquisition and related costs were included in Corporate and Eliminations. For the nine months ended September 27, 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 nine months ended September 29, 2019, as if the acquisition of eOne had occurred on December 31, 2018, the first day of the Company’s 2019 fiscal year are presented below (in thousands, except per share amounts):
Quarter EndedNine Months Ended
September 29, 2019September 29, 2019
Revenues$1,858,483 $4,272,833 
Net earnings218,858 255,357 
Net earnings attributable to Hasbro, Inc.216,536 250,443 
Net earnings per common share:
     Diluted$1.57 $1.82 
     Basic$1.57 $1.82 

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:
•transaction costs of $3,244 for the quarter and nine months ended September 29, 2019 incurred by eOne related to the eOne Acquisition, included in Selling, Distribution and Administration;
•additional amortization expense of $9,726 and $30,778 for the quarter and nine months ended September 29, 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 $19,105 and $57,316 for the quarter and nine months ended September 29, 2019, respectively, as a result of incurring new debt and extinguishing historical eOne debt;

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
•total reduction in Other Expense of $25,533 and $45,345 for the quarter and nine months ended September 29, 2019, respectively, consisting of:
◦$25,533 for the quarter and nine months ended September 29, 2019 related to the mark to market of foreign exchange forward and option contracts, which the Company entered into in order to hedge a portion of the British pound sterling purchase price for the eOne Acquisition; and
◦$19,812 for the nine months ended September 29, 2019 related to premiums paid by eOne in connection with the 2019 early redemption and refinancing of its senior secured notes and the related write-off of unamortized deferred finance charges associated with the senior secured notes;
•the income tax effect of the pro forma adjustments resulted in income tax benefits of $683 and $8,707 for the quarter and nine months ended September 29, 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 Per Share
Net earnings per share data for the quarters and nine months ended September 29, 201927, 2020 and September 30, 201829, 2019 were computed as follows:
 2019 2018
QuarterBasic Diluted Basic Diluted
Net earnings$212,949
 212,949
 263,861
 263,861
        
Average shares outstanding126,453
 126,453
 127,161
 127,161
Effect of dilutive securities:       
Options and other share-based awards—
 751
 —
 731
Equivalent Shares126,453
 127,204
 127,161
 127,892
        
Net earnings per common share$1.68
 1.67
 2.08
 2.06


20202019
QuarterBasicDilutedBasicDiluted
Net earnings attributable to Hasbro, Inc.$220,898 220,898 $212,949 212,949 
Average shares outstanding137,258 137,258 126,453 126,453 
Effect of dilutive securities:
Options and other share-based awards— 232 — 751 
Equivalent Shares137,258 137,490 126,453 127,204 
Net earnings attributable to Hasbro, Inc. per common share$1.61 1.61 $1.68 1.67 

20202019
Nine MonthsBasicDilutedBasicDiluted
Net earnings attributable to Hasbro, Inc.$117,346 117,346 $253,109 253,109 
Average shares outstanding137,214 137,214 126,356 126,356 
Effect of dilutive securities:
Options and other share-based awards— 251 — 600 
Equivalent Shares137,214 137,465 126,356 126,956 
Net earnings attributable to Hasbro, Inc. per common share$0.86 0.85 $2.00 1.99 

 2019 2018
Nine MonthsBasic Diluted Basic Diluted
Net earnings$253,109
 253,109
 211,668
 211,668
        
Average shares outstanding126,356
 126,356
 125,982
 125,982
Effect of dilutive securities:       
Options and other share-based awards—
 600
 —
 792
Equivalent Shares126,356
 126,956
 125,982
 126,774
        
Net earnings per common share$2.00
 1.99
 1.68
 1.67

For the quarter and nine months ended September 30, 2018,27, 2020, options and restricted stock units totaling 949 shares2,852 and 3,046, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been anti-dilutive. For the quarter ended September 29, 2019, 0no options or restricted stock units were anti-dilutive. For the nine month periodsmonths ended September 29, 2019, and September 30, 2018, options and restricted stock units totaling 1,088 and 1,124 shares, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been antidilutive.anti-dilutive.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
(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 nine month periodsmonths ended September 29, 201927, 2020 and September 30, 2018.29, 2019.
Quarter EndedNine Months Ended
September 27,
2020		September 29,
2019		September 27,
2020		September 29,
2019
Other comprehensive earnings (loss), tax effect:
Tax benefit (expense) on unrealized holding gains (losses)$235 46 $(381)(116)
Tax benefit (expense) on cash flow hedging activities285 (570)(5,474)(524)
Tax benefit on foreign currency translation adjustments0 0 8,406 0 
Tax expense on changes in unrecognized pension amounts0 0 0 (5,687)
Reclassifications to earnings, tax effect:
Tax expense on cash flow hedging activities1,928 703 3,379 1,237 
Amortization of unrecognized pension and postretirement amounts(80)(80)(239)(1,619)
Tax benefit on settlement of U.S defined benefit plan0 0 0 (24,925)
Total tax effect on other comprehensive earnings (loss)$2,368 99 $5,691 (31,634)
 Quarter Ended Nine Months Ended
 September 29,
2019		 September 30,
2018		 September 29,
2019		 September 30,
2018
        
Other comprehensive earnings (loss), tax effect:       
Tax benefit (expense) on unrealized holding gains (losses)$46
 179
 (116) 195
Tax (expense) benefit on cash flow hedging activities(570) (73) (524) 238
Tax (expense) benefit on changes in unrecognized pension amounts—
 —
 (5,687) 7,565
Reclassifications to earnings, tax effect:       
Tax expense on cash flow hedging activities703
 1,015
 1,237
 107
Tax benefit on unrecognized pension and postretirement amounts reclassified to the consolidated statements of operations(80) (600) (1,619) (1,857)
Tax benefit on settlement of U.S defined benefit plan—
 —
 (24,925) —
Total tax effect on other comprehensive earnings (loss)$99
 521
 (31,634) 6,248





Changes in the components of accumulated other comprehensive earnings (loss) for the nine months ended September 29, 201927, 2020 and September 30, 201829, 2019 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$(143,134) 1,549
 (744) (152,185) (294,514)
Current period other comprehensive earnings (loss)111,019
 3,839
 400
 (6,120) 109,138
Balance at September 29, 2019$(32,115) 5,388
 (344) (158,305) (185,376)
          
2018         
Balance at December 31, 2017$(110,971) (32,827) 1,034
 (96,661) (239,425)
Adoption of ASU 2018-02(18,065) (3,660) 222
 —
 (21,503)
Current period other comprehensive earnings (loss)(19,660) 29,083
 (673) (44,560) (35,810)
Balance at September 30, 2018$(148,696) (7,404) 583
 (141,221) (296,738)

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$(36,129)(5,232)(230)(142,629)(184,220)
Current period other comprehensive earnings (loss)824 (105)1,315 (98,144)(96,110)
Balance at September 27, 2020$(35,305)(5,337)1,085 (240,773)(280,330)
2019
Balance at December 30, 2018$(143,134)1,549 (744)(152,185)(294,514)
Current period other comprehensive earnings (loss)111,019 3,839 400 (6,120)109,138 
Balance at September 29, 2019$(32,115)5,388 (344)(158,305)(185,376)
Gains (Losses) on Derivative Instruments
At September 29, 2019,27, 2020, the Company had remaining net deferred gains on foreign currency forward contracts, net of tax, of $23,654$11,534 in accumulated other comprehensive loss ("AOCE"). These instruments hedge payments related to inventory purchased in the third 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 third 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.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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 September 29, 2019,27, 2020, deferred losses, net of tax of $18,266$16,871 related to these instruments remained in AOCE. For the quarters ended September 29, 201927, 2020 and September 30, 2018,29, 2019, previously deferred losses of $450, were reclassified from AOCE to net earnings. For the nine monthnine-month periods ended September 29, 201927, 2020 and September 30, 2018,29, 2019, previously deferred losses of $1,349 were reclassified from AOCE to net earnings.
Of the amount included in AOCE at September 29, 2019,27, 2020, the Company expects net gains of approximately $18,471$8,143 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 September 27, 2020, September 29, 2019 and December 29, 2019 were as follows:

September 27, 2020September 29, 2019December 29, 2019
Royalties$206,645 $178,100 $196,558 
Advertising131,481 130,434 59,440 
Payroll and management services89,197 72,032 85,635 
Dividends93,180 85,852 93,067 
Severance41,707 55,066 35,039 
Participations and Residuals309,156 9,742 10,432 
Other Taxes70,553 52,457 66,715 
Lease liability -Current42,814 29,489 30,673 
Accrued income taxes18,364 26,366 14,276 
Deferred revenue147,554 49,381 48,465 
Other319,425 268,777 272,352 
Total accrued liabilities$1,470,076 $957,696 $912,652 

Condensed Notes to Consolidated Financial Statements

(Thousands of Dollars and Shares Except Per Share Data)

(5)(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 September 27, 2020, September 29, 2019 September 30, 2018 and December 30, 2018,29, 2019, the carrying cost of these instruments approximated their fair value. The Company's financial instruments at September 27, 2020, September 29, 2019 September 30, 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 September 27, 2020, September 29, 2019 September 30, 2018 and December 30, 201829, 2019 are as follows:
September 27, 2020September 29, 2019December 29, 2019
Carrying
Cost		Fair
Value		Carrying
Cost		Fair
Value		Carrying
Cost		Fair
Value
3.90% Notes Due 2029$900,000 947,520 $0 0 $900,000 893,430 
3.55% Notes Due 2026675,000 716,108 0 0 675,000 680,670 
3.00% Notes Due 2024500,000 531,850 0 0 500,000 502,150 
6.35% Notes Due 2040500,000 587,400 500,000 587,850 500,000 581,600 
3.50% Notes Due 2027500,000 518,750 500,000 511,200 500,000 500,550 
2.60% Notes Due 2022300,000 310,680 0 0 300,000 300,960 
5.10% Notes Due 2044300,000 313,350 300,000 310,080 300,000 301,980 
3.15% Notes Due 2021300,000 303,540 300,000 303,300 300,000 303,900 
6.60% Debentures Due 2028109,895 130,324 109,895 133,555 109,895 130,610 
Variable % Notes Due December 30, 2022400,000 400,000 0 0 0 0 
Variable % Notes Due December 30, 2024577,500 577,500 0 0 0 0 
Production Financing Facilities121,444 121,444 0 0 0 0 
Total long-term debt5,183,839 5,458,466 1,709,895 1,845,985 4,084,895 4,195,850 
Less: Deferred debt expenses36,763 — 13,691 — 38,438 — 
Less: Current portion369,269 — 0 — 0 — 
Long-term debt$4,777,807 5,458,466 $1,696,204 1,845,985 $4,046,457 4,195,850 
 September 29, 2019 September 30, 2018 December 30, 2018
 
Carrying
Cost
 
Fair
Value
 
Carrying
Cost
 
Fair
Value
 
Carrying
Cost
 
Fair
Value
6.35% Notes Due 2040$500,000
 587,850
 500,000
 546,450
 500,000
 535,000
3.50% Notes Due 2027500,000
 511,200
 500,000
 466,350
 500,000
 457,350
5.10% Notes Due 2044300,000
 310,080
 300,000
 285,390
 300,000
 272,640
3.15% Notes Due 2021300,000
 303,300
 300,000
 297,720
 300,000
 297,600
6.60% Debentures Due 2028109,895
 133,555
 109,895
 124,698
 109,895
 123,346
Total long-term debt$1,709,895
 1,845,985
 1,709,895
 1,720,608
 1,709,895
 1,685,936
Less: Deferred debt expenses13,691
 —
 15,174
 —
 14,803
 —
Long-term debt$1,696,204
 1,845,985
 1,694,721
 1,720,608
 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 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

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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 require principal amortization payments that are payable in equal quarterly installments of 5.0% per annum of the original principal amount thereof for each of the first two years after funding, increasing to 10.0% per annum of the original principal amount thereof for each subsequent year. The Term Loan Agreement contains affirmative and negative covenants typical of this type of facility, including: (i) restrictions on the Company’s and its domestic subsidiaries’ ability to allow liens on their assets, (ii) restrictions on the incurrence of indebtedness, (iii) restrictions on the Company’s and certain of its subsidiaries’ ability to engage in certain mergers, (iv) the requirement that the Company maintain a Consolidated Interest Coverage Ratio of no less than 3.00:1.00 as of the end of any fiscal quarter and (v) the requirement that the Company maintain a Consolidated Total Leverage Ratio of no more than, depending on the gross proceeds of equity securities issued after the effective date of the acquisition of eOne, 5.65:1.00 or 5.40:1.00 for each of the first, second and third fiscal quarters ended after the funding of the Term Loan Facilities, with periodic step downs to 3.50:1.00 for the fiscal quarter ending December 31, 2023 and thereafter. The notes were drawn down on December 30, 2019, the closing date of the eOne Acquisition. During the first nine months of 2020, the Company made its required quarterly principal amortization payments totaling $22,500 on the Five-Year Tranche loans. As of September 27, 2020, the Company was in compliance with the financial covenants contained in the Term Loan Agreement.

Current portion long-term debt at September 27, 2020 of $369,269, 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
September 27, 2020
Production financing held by production subsidiaries$121,444 
Other loans8,998 
          Total$130,442 
Production financing shown in the consolidated balance sheet as:
Non-current$82,175 
Current39,269 
          Total$121,444 
Other loans of $8,998, consist of production related demand loans, and are recorded within Short-term Borrowings in the Company's consolidated balance sheets.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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 September 27, 2020 was 5.1%.

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 September 27, 2020$57,317 73,125 130,442 
The following table represents the movements in production financing and other related loans acquired as a result of the eOne Acquisition during the first nine months of 2020:
Production FinancingOther LoansTotal
December 30, 2019$209,651 9,102 218,753 
Drawdowns38,871 22,853 61,724 
Repayments(124,824)(22,668)(147,492)
Foreign exchange differences(2,254)(289)(2,543)
Balance at September 27, 2020$121,444 8,998 130,442 
(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 $619,545 as of September 27, 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 September 27, 2020:
September 27, 2020
Film and TV Programming
Released, less amortization$477,329 
Completed and not released18,070 
In production51,001 
Pre-production41,144 
587,544 
Other Programming
Released, less amortization11,511 
Completed and not released3,421 
In production9,057 
Pre-production8,012 
32,001 
Total program costs$619,545 

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
The Company recorded $244,194 of program cost amortization related to the above programming in the nine months ended September 27, 2020, consisting of the following:
Investment in ProductionInvestment in ContentTotal
Program cost amortization$172,630 71,564 244,194 
(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 corporate
Our 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 35.0% for the ASC 740 income tax effects ofnine months ended September 27, 2020 and 14.3% for the Tax Act.  An entity recognizesnine months ended September 29, 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,nine months ended September 27, 2020, the Company recorded a discrete net tax benefit of $5,290 consisting of the following:
◦a tax benefit of $25,302 resulting from the eOne Acquisition and related costs incurred;
◦tax expense of $47,800$13,680 related to revaluation of tax attributes as a result of the United Kingdom’s ("UK") enactment during the quarter of the Finance Act of 2020 which maintains the corporate income tax rate at 19%; and
◦tax expense of $6,332 primarily related to an increase of uncertain tax positions based on changes in management judgment.

•our estimated annual ETR increased to 19.9% from 18.2% as a result of the eOne Acquisition during the first nine 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. In the third quarter of 2018, the estimate was further revised based on additional guidance and a one-time tax benefit of $17,336 was recorded.forecasted income by jurisdiction.

For•during the nine months ended September 29, 2019, the Company recorded a discrete net tax benefit of $31,674, of which $24,925 as a result of the charge incurred fromwas associated with the settlement of itsthe U.S. defined benefit pension plan liability duringand $6,749 primarily related to 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.

The Company is no longer subject to U.S. federal income tax examinations for years before 2013.2016. 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 2012.2014. 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 September 27, 2020, September 29, 2019 September 30, 2018 and December 30, 2018,29, 2019, these investments totaled $13,384, $24,916 $24,201 and $23,913,$25,518, respectively, and are included in prepaid expenses and other current assets in the consolidated balance sheets. In

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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 gains (losses) of $5661,067 and $1,293$(144) on these investments in other (income) expense, net for the quarter and nine months ended September 29, 2019,27, 2020, respectively, related to the change in fair value of such instruments. For the quarter and nine month periods ended September 30, 2018,29, 2019, the Company recorded net (losses) gains of $(10)$566 and $96,1,293, respectively, in other (income) expense net, related to the change in fair value of such instruments.




At September 27, 2020, September 29, 2019 September 30, 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)
September 29, 2019       
Assets:       
Available-for-sale securities$1,148
 1,148
 —
 —
Derivatives54,030
 —
 54,030
 —
Total assets$55,178
 1,148
 54,030
 —
        
Liabilities:       
Derivatives$11,508
 —
 11,508
 —
Option agreement22,196
 —
 —
 22,196
Total liabilities$33,704
 —
 11,508
 22,196
        
September 30, 2018       
Assets:       
Available-for-sale securities$2,346
 2,346
 —
 —
Derivatives20,079
 —
 20,079
 —
Total assets$22,425
 2,346
 20,079
 —
        
Liabilities:       
Derivatives$2,113
 —
 2,113
 —
Option agreement23,460
 —
 —
 23,460
Total liabilities$25,573
 —
 2,113
 23,460
        
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)
September 27, 2020
Assets:
Available-for-sale securities$3,682 3,682 0 0 
Derivatives15,736 0 15,736 0 
Total assets$19,418 3,682 15,736 0 
Liabilities:
Derivatives$372 0 372 0 
Option agreement20,615 0 0 20,615 
Total liabilities$20,987 0 372 20,615 
September 29, 2019
Assets:
Available-for-sale securities$1,148 1,148 0 0 
Derivatives54,030 0 54,030 0 
Total assets$55,178 1,148 54,030 0 
Liabilities:
Derivatives$11,508 0 11,508 0 
Option agreement22,196 0 0 22,196 
Total liabilities$33,704 0 11,508 22,196 
December 29, 2019
Assets:
Available-for-sale securities$1,296 1,296 0 0 
Derivatives48,973 0 48,973 0 
Total assets$50,269 1,296 48,973 0 
Liabilities:
Derivatives$5,733 0 5,733 0 
Option agreement22,145 0 0 22,145 
Total Liabilities$27,878 0 5,733 22,145 
Available-for-sale securities include equity securities of one1 company quoted on an active public market.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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"). The option agreement is included in other liabilities at September 27, 2020, September 29, 2019 September 30, 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 nine monthnine-month period ended September 29, 2019.27, 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$(23,440) (23,980)
Gain from change in fair value1,244
 520
Balance at end of third quarter$(22,196) (23,460)

20202019
Balance at beginning of year$(22,145)(23,440)
Gain from change in fair value1,530 1,244 
Balance at end of third quarter$(20,615)(22,196)
In addition to the above, the Company has three investments for which the fair value is measured using net asset value per share. At September 27, 2020, September 29, 2019 September 30, 2018 and December 30, 2018,29, 2019, these investments had fair values of $13,384, $24,916 $24,201 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)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 September 29, 2019, the Company had unrecognized losses related to its remaining pension and postretirement plans of $32,115.
The components of the net periodic cost of the Company's terminated U.S. Pension Plan, remaining defined benefit pension plan and other postretirement plans for the quarters and nine months ended September 29, 2019 and September 30, 2018 are as follows:
 Quarter Ended
 Pension Postretirement
 September 29,
2019		 September 30,
2018		 September 29,
2019		 September 30,
2018
Service cost$325
 678
 311
 189
Interest cost821
 3,997
 316
 292
Expected return on assets(476) (5,190) —
 —
Settlement—
 —
 —
 —
Net amortization and deferrals598
 2,971
 5
 42
Net periodic benefit cost$1,268
 2,456
 632
 523




 Nine Months Ended
 Pension Postretirement
 September 29,
2019		 September 30,
2018		 September 29,
2019		 September 30,
2018
Service cost2,170
 2,030
 667
 566
Interest cost7,939
 11,993
 948
 877
Expected return on assets(7,642) (15,569) —
 —
Settlement110,777
 —
 —
 —
Net amortization and deferrals7,906
 8,913
 15
 127
Net periodic benefit cost121,150
 7,367
 1,630
 1,570

During the nine months ended September 29, 2019, the Company made cash contributions of $1,880 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 $2,100 in the aggregate.
(9)(11) 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 September 27, 2020, September 29, 2019 September 30, 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:
September 29, 2019 September 30, 2018 December 30, 2018September 27, 2020September 29, 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$420,839
 24,462
 555,661
 6,827
 468,305
 15,089
Inventory purchases$315,924 9,148 $420,839 24,462 $398,800 8,727 
Sales212,062
 7,231
 319,421
 13,027
 298,194
 11,232
Sales111,760 3,940 212,062 7,231 124,920 4,037 
Royalties and Other16,935
 (137) 117,534
 (2,420) 26,341
 (304)
Production financing and otherProduction financing and other115,228 2,199 16,935 (137)19,499 140 
Total$649,836
 31,556
 992,616
 17,434
 792,840
 26,017
Total$542,912 15,287 $649,836 31,556 $543,219 12,904 


Condensed Notes to Consolidated Financial Statements

(Thousands of Dollars and Shares Except Per Share Data)


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 September 27, 2020, September 29, 2019 September 30, 2018 and December 30, 201829, 2019 as follows:
September 29,
2019		 September 30,
2018		 December 30,
2018		September 27,
2020		September 29,
2019		December 29,
2019
Prepaid expenses and other current assets     Prepaid expenses and other current assets
Unrealized gains$22,529
 15,414
 21,718
Unrealized gains$13,357 22,529 12,133 
Unrealized losses(1,333) (4,079) (972)Unrealized losses(1,737)(1,333)(3,955)
Net unrealized gains$21,196
 11,335
 20,746
Net unrealized gains$11,620 21,196 8,178 
     
Other assets     Other assets
Unrealized gains$10,609
 9,591
 6,173
Unrealized gains$4,218 10,609 6,652 
Unrealized losses(249) (1,455) (843)Unrealized losses(179)(249)0 
Net unrealized gains$10,360
 8,136
 5,330
Net unrealized gains$4,039 10,360 6,652 
     
Accrued liabilities     Accrued liabilities
Unrealized gains$—
 596
 77
Unrealized gains$680 0 293 
Unrealized losses—
 (1,182) (136)Unrealized losses(992)0 (2,219)
Net unrealized losses$—
 (586) (59)Net unrealized losses$(312)0 (1,926)
     
Other liabilities     Other liabilities
Unrealized gains$—
 1,035
 —
Unrealized gains$13 0 0 
Unrealized losses—
 (2,486) —
Unrealized losses(73)0 0 
Net unrealized losses$—
 (1,451) —
Net unrealized losses$(60)0 0 


Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the quarters and nine months ended September 27, 2020 and September 29, 2019 and September 30, 2018 as follows:
 Quarter Ended Nine Months Ended
 September 29,
2019		 September 30,
2018		 September 29,
2019		 September 30,
2018
Statements of Operations Classification       
Cost of sales$4,678
 3,358
 9,278
 (1,483)
Net revenues1,889
 1,328
 3,366
 2,090
Other(23) (17) 129
 (101)
Net realized gains$6,544
 4,669
 12,773
 506

Quarter EndedNine Months Ended
September 27,
2020		September 29,
2019		September 27,
2020		September 29,
2019
Statements of Operations Classification
Cost of sales$7,116 4,678 $16,680 9,278 
Net revenues1,237 1,889 2,413 3,366 
Other859 (23)1,410 129 
Net realized gains$9,212 6,544 $20,503 12,773 
Undesignated Hedges
Intercompany Loans
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 September 27, 2020, September 29, 2019 September 30, 2018 and December 30, 201829, 2019 the total notional amounts of the Company's undesignated derivative instruments were $538,892, $308,867 $311,331 and $452,773,$307,351, respectively.

Condensed Notes to Consolidated Financial Statements

(Thousands of Dollars and Shares Except Per Share Data)

At September 27, 2020, September 29, 2019 September 30, 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:
 September 29,
2019		 September 30,
2018		 December 30,
2018
Prepaid expenses and other current assets     
Unrealized gains$2,630
 2,060
 —
Unrealized losses(301) (1,452) —
Net unrealized gains$2,329
 608
 —
      
Accrued liabilities     
Unrealized gains$164
 12
 1,269
Unrealized losses(203) (33) (2,820)
Net unrealized losses$(39) (21) (1,551)
      
Other liabilities     
Unrealized gains—
 30
 —
Unrealized losses—
 (85) —
Net unrealized losses—
 (55) —
      
Total unrealized (losses) gains, net$2,290
 532
 (1,551)

September 27,
2020		September 29,
2019		December 29,
2019
Prepaid expenses and other current assets
Unrealized gains$3,294 2,630 0 
Unrealized losses(3,217)(301)0 
Net unrealized gains$77 2,329 0 
Accrued liabilities
Unrealized gains$0 164 13 
Unrealized losses0 (203)(3,820)
Net unrealized losses$0 (39)(3,807)
Total unrealized gains (losses), net$77 2,290 (3,807)
The Company recorded net losses of $(6,914) and $(20,142) on these instruments to other (income) expense, net for the quarter and nine months ended September 27, 2020, respectively, and net gains of $10,121 and $16,705 on these instruments to other (income) expense, net for the quarter and nine month periodsmonths ended September 29, 2019, respectively, and net gains of $5,030 and $8,781 on these instruments to other (income) expense, net for the quarter and nine month periods ended September 30, 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

As described in Note 1, duringDuring 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 purchaseAcquisition using a series of both foreign exchange forward and option contracts. These contracts dodid not qualify for hedge accounting and, as such, were marked to market through the Company's Consolidated Statement of Operations. AsFor tax purposes these contracts qualified as nontaxable integrated tax hedges. These contracts matured on December 30, 2019 (the closing date of September 29, 2019, these derivative instruments had a total notional value of $2,867,500the transaction) and a net fair value of $8,676 of which $20,145 is recorded to prepaid expenses and other current assets and $11,469 is recorded to accounts payable and accrued liabilities within the Company’s consolidated financial statements. In addition, the Company recorded pretax netgains or losses of $25,533recognized on these instruments to other (income) expense, net forcontracts in the quarter and nine month periods ended September 29, 2019.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 to 18 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 nine months ended September 27, 2020, the Company's operating lease and other rental expenses were $22,281 and $67,564, respectively. For the quarter and nine months ended September 29, 2019, operating lease expense wasand other rental expenses were $8,907 and $26,982,$26,982, respectively. Expense related to short-term leases (expected terms less than 12 months) and variable lease payments was not material in the quarter or nine months ended September 27, 2020 or September 29, 2019.

Condensed Notes to Consolidated Financial Statements

(Thousands of Dollars and Shares Except Per Share Data)
Information related to the Company’s leases for the quarter and nine months ended September 27, 2020 and September 29, 2019 isare as follows:
 Quarter Ended Nine Months Ended
 September 29,
2019		 September 29,
2019
Cash paid for amounts included in the measurement of lease liabilities:   
Operating cash flows from operating leases$9,003
 $27,817
Right-of-use assets obtained in exchange for lease obligations:   
Operating leases$1,363
 $25,622
    
Weighted Average Remaining Lease Term   
Operating leases

 6.4 years
Weighted Average Discount Rate   
Operating leases

 4.5%
    

Quarter EndedNine Months Ended
September 27,
2020		September 29,
2019		September 27,
2020		September 29,
2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$13,158 9,003 $38,774 27,817 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$2,097 1,363 $102,521 25,622 
Weighted Average Remaining Lease Term
Operating leases6.2 years6.4 years6.2 years6.4 years
Weighted Average Discount Rate
Operating leases3.1 %4.5 %3.1 %4.5 %
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 September 29, 2019:
27, 2020:
September 27,
2020
September 29,
2019
2019 (excluding the nine months ended September 29, 2019)$8,969
202033,876
2020 (excluding the nine months ended September 27, 2020)2020 (excluding the nine months ended September 27, 2020)$12,576 
202129,248
202147,794 
202227,012
202243,660 
202321,918
202335,763 
2024 and thereafter45,288
2024202424,513 
2025 and thereafter2025 and thereafter66,276 
Total future lease payments166,311
Total future lease payments230,582 
Less imputed interest21,856
Less imputed interest24,976 
Present value of future operating lease payments144,455
Present value of future operating lease payments205,606 
Less current portion of operating lease liabilities (1)
29,489
Less current portion of operating lease liabilities (1)
42,814 
Non-current operating lease liability (2)
114,966
Non-current operating lease liability (2)
162,792 
Operating lease right-of-use assets, net (3)
$127,005
Operating lease right-of-use assets, net (3)
$189,211 
(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

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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 the Company's legacy television and film 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 nine months ended September 30, 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 nine month periodsmonths ended September 29, 201927, 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 nine month periods ended September 29, 2019 and September 30, 2018 are as follows:
 Quarter Ended
 September 29, 2019 September 30, 2018
Net revenuesExternal Affiliate External Affiliate
U.S. and Canada$898,269
 2,535
 912,179
 2,364
International561,137
 —
 560,704
 2
Entertainment, Licensing and Digital115,766
 3,849
 96,803
 4,712
Global Operations  (a)1
 538,817
 —
 557,049
Corporate and Eliminations (b)—
 (545,201) —
 (564,127)
 $1,575,173
 —
 1,569,686
 —

 Nine Months Ended
 September 29, 2019 September 30, 2018
Net revenuesExternal Affiliate External Affiliate
U.S. and Canada$1,766,649
 7,379
 1,714,536
 7,093
International1,221,224
 186
 1,229,093
 290
Entertainment, Licensing and Digital304,266
 7,989
 246,747
 11,378
Global Operations  (a)81
 1,088,860
 109
 1,152,851
Corporate and Eliminations (b)—
 (1,104,414) —
 (1,171,612)
 $3,292,220
 —
 3,190,485
 —





As a result of the realignment of the Company's financial reporting segments, revenues of $11,999 and $33,271 for the quarterquarters and nine months ended September 30, 2018, respectively, were reclassified from the U.S.27, 2020 and Canada segment to the Entertainment, Licensing and Digital segment to conform to current year presentation.September 29, 2019 are as follows:
Quarter Ended
Quarter Ended Nine Months EndedSeptember 27, 2020September 29, 2019
Operating profit (loss)September 29,
2019		 September 30,
2018		 September 29,
2019		 September 30,
2018
Net revenuesNet revenuesExternalAffiliateExternalAffiliate
U.S. and Canada$193,686
 $223,061
 $313,795
 $269,539
U.S. and Canada$977,115 5,938 $898,269 2,535 
International67,238
 66,274
 51,410
 10,359
International517,007 133 561,137 0 
Entertainment, Licensing and Digital24,594
 37,113
 62,550
 76,016
Entertainment, Licensing and Digital89,027 2,110 115,766 3,849 
eOneeOne193,474 0 0 0 
Global Operations (a)11,074
 3,179
 6,342
 (4,623)Global Operations (a)0 431,738 1 538,817 
Corporate and Eliminations (b)618
 (16,291) 27,573
 (30,786)Corporate and Eliminations (b)0 (439,919)0 (545,201)
$297,210
 $313,336
 $461,670
 $320,505
$1,776,623 0 $1,575,173 0 

As a result
Nine Months Ended
September 27, 2020September 29, 2019
Net revenuesExternalAffiliateExternalAffiliate
U.S. and Canada$1,765,482 12,990 $1,766,649 7,379 
International1,017,222 133 1,221,224 186 
Entertainment, Licensing and Digital262,879 3,918 304,266 7,989 
eOne696,889 0 0 0 
Global Operations  (a)0 898,808 81 1,088,860 
Corporate and Eliminations (b)0 (915,849)0 (1,104,414)
$3,742,472 0 $3,292,220 0 


Condensed Notes to Consolidated Financial Statements
(Thousands of the realignment of the Company's financial reporting segments, operating profit of $3,455Dollars and $9,825 for the quarter and nine months ended September 30, 2018, respectively, were reclassified from the U.S. and Canada segment to the Entertainment, Licensing and Digital segment to conform to current year presentation.
Shares Except Per Share Data)
Quarter EndedNine Months Ended
Total assetsSeptember 29,
2019		 September 30,
2018		 December 30,
2018
Operating profit (loss)Operating profit (loss)September 27,
2020		September 29,
2019		September 27,
2020		September 29,
2019
U.S. and Canada$3,331,125
 3,028,291
 2,898,816
U.S. and Canada$262,977 193,686 $359,028 313,795 
International2,394,488
 2,323,866
 2,229,053
International63,924 67,238 12,333 51,410 
Entertainment, Licensing and Digital1,031,906
 890,526
 621,595
Entertainment, Licensing and Digital32,791 24,594 65,758 62,550 
eOneeOne(25,914)0 (64,962)0 
Global Operations (a)3,255,286
 4,306,291
 3,197,847
Global Operations (a)5,681 11,074 4,385 6,342 
Corporate and Eliminations (b)(4,458,181) (5,053,645) (3,684,323)Corporate and Eliminations (b)(2,901)618 (61,092)27,573 
$5,554,624
 5,495,329
 5,262,988
$336,558 297,210 $315,450 461,670 
Total assetsSeptember 27,
2020		September 29,
2019		December 29,
2019
U.S. and Canada$3,835,054 3,331,125 3,244,950 
International2,234,562 2,394,488 2,482,170 
Entertainment, Licensing and Digital1,162,684 1,031,906 695,898 
eOne5,686,389 0 0 
Global Operations (a)3,465,018 3,255,286 3,334,190 
Corporate and Eliminations (b)(5,680,530)(4,458,181)(901,580)
$10,703,177 5,554,624 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 nine month periodsmonths ended September 29, 201927, 2020 and September 30, 2018:29, 2019:
Quarter Ended Nine Months EndedQuarter EndedNine Months Ended
September 29,
2019		 September 30,
2018		 September 29,
2019		 September 30,
2018		September 27,
2020		September 29,
2019		September 27,
2020		September 29,
2019
Europe$319,277
 331,353
 $673,728
 686,490
Europe$343,179 319,277 $663,100 673,728 
Latin America151,987
 145,703
 305,106
 308,065
Latin America91,619 151,987 158,028 305,106 
Asia Pacific89,873
 83,648
 242,390
 234,538
Asia Pacific82,209 89,873 196,094 242,390 
Net revenues$561,137
 560,704
 $1,221,224
 1,229,093
Net revenues$517,007 561,137 $1,017,222 1,221,224 
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 TV revenues. Revenues related to eOne brands, including PEPPA PIG, PJ MASKS and RICKY ZOOM, are reported in the Emerging Brands portfolio.


Condensed Notes to Consolidated Financial Statements

(Thousands of Dollars and Shares Except Per Share Data)

The following table presents consolidated net revenues by brand and entertainment portfolio for the quarters and nine month periodsmonths ended September 29, 201927, 2020 and September 30, 2018:29, 2019:
 Quarter Ended Nine Months Ended
 September 29,
2019		 September 30,
2018		 September 29,
2019		 September 30,
2018
Franchise Brands$779,659
 $847,745
 $1,749,948
 $1,715,986
Partner Brands427,029
 305,827
 812,466
 714,424
Hasbro Gaming232,287
 280,832
 463,272
 520,334
Emerging Brands136,198
 135,282
 266,534
 239,741
Total$1,575,173
 $1,569,686
 $3,292,220
 $3,190,485

Quarter EndedNine Months Ended
September 27,
2020		September 29,
2019		September 27,
2020		September 29,
2019
Franchise Brands$807,555 779,659 $1,580,878 1,749,948 
Partner Brands409,214 427,029 729,772 812,466 
Hasbro Gaming (1)
239,222 232,287 516,337 463,272 
Emerging Brands (2)
154,965 136,198 325,101 266,534 
TV/Film/Entertainment (3)
165,667 0 590,384 0 
Total$1,776,623 1,575,173 $3,742,472 3,292,220 
(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 $449,393$543,107 and $1,086,151$1,202,604 for the quarter and nine months ended September 27, 2020, respectively. For the quarter and nine months ended September 29, 2019, respectively. For the quarter and nine months ended September 30, 2018, total gaming revenues were $447,844$449,393 and $964,159,$1,086,151, respectively.
(12)(2) Emerging Brands portfolio balances for the quarter and nine-month period ended September 27, 2020 include eOne brands PEPPA PIG, PJ MASKS and RICKY ZOOM.
(3) TV/Film/Entertainment represents eOne revenues not allocated to the Emerging Brands portfolio.
(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 quarternine 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 nine months ended June 28, 2020, and reported within Corporate and Eliminations.
In the first nine months 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 yearnine months ended December 30, 2018September 27, 2020, and reported within Corporate and Eliminations. NaN additional charges were taken in the first nine months of 2019.

The detail of activity related to the programprograms for the nine months ended September 27, 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)
Payments made in the third quarter of 2019(6,696)
Remaining amounts as of September 29, 2019$46,944
2018 Restructuring ProgrameOne Integration ProgramOtherTotal
Remaining amounts to be paid as of December 29, 2019$31,113 0 0 $31,113 
2020 restructuring charges0 20,832 11,554 32,386 
Payments made in the first nine months of 2020(17,510)(8,223)(1,096)(26,829)
Remaining amounts as of September 27, 2020$13,603 12,609 10,458 $36,670 



Condensed Notes to Consolidated Financial Statements

(Thousands of Dollars and Shares Except Per Share Data)

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; 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, business opportunities performance; anticipated expenses; and strategies, financialworking capital and business 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, anticipated uses of cash, and expectations relating to the Company’s proposed acquisition of Entertainment One.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 and Entertainment 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. 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 needworld a better place for play and connection forall children and all 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 talent to lead in today’s converged retail environment based on Hasbro’s understanding of the consumer and how its retailers are going to market.talent.
Hasbro generates revenue and earns cash by developing, marketing and selling products based on global brands in a broad variety of consumer goods categories, in digital gaming applications and through distribution of television programming and

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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. Additionally, Hasbro's eOne business generates revenue and earnings from the production and distribution of a broad spectrum of television and film entertainment that is not based on our children’s and family entertainment brands, as well as from music production and distribution geared towards all audiences.
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 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 adverse impact on our business 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 business operations, temporary closures or limited reopenings of non-essential businesses, shelter-in-place and stay-at-home orders, reductions in consumers going to retail stores and buying products, 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 products 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 COVID-19 to our business, the efforts will not prevent our business from being adversely affected, and the longer 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 earnings, 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 nine months 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 States, 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 since returned to planned operating capacity and production output for this time of year. Outside of China, manufacturing operated at varying levels during the first nine months of 2020 depending on local government action, the prevalence of COVID-19 infection, and overall safety considerations. In response, the Company utilized its global supply chain and existing inventory to work to meet demand, which has remained strong. Headed into the fourth quarter of 2020, the Company continues to make up for lost production in areas of the business where demand has been strongest, such as gaming, and believes it is well positioned for holiday demand, as nearly all of Hasbro's partner factories and warehouses are currently open and operating. However, if manufacturing facilities are impacted by a resurgence in COVID-19, we may experience further disruptions in the Company's supply chain in the near term.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
During the first nine months 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 kids remain 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 nine months of 2020, than those markets that rely more heavily on physical stores for reaching consumers. Markets in Latin America, which have less advanced e-comm business and where retail store closures remain high, have been and are expected to continue to be challenged during the remainder of 2020. The negative impact to future periods from store closures or limited reopenings remains unknown.
Beginning late in the first quarter and continuing throughout the first nine months of 2020, production and delivery of live-action television and film projects for Hasbro's eOne TV and Film business have been delayed, negatively impacting the level and timing of revenues. For several months following the initial COVID-19 outbreak, live-action productions were shut down; however, the industry has been working to resume live-action production operations. As of the end of the third quarter, live-action productions have restarted in the United Kingdom and Canada and in certain other European countries. In the former EntertainmentU.S., the expectation is for live-action productions to resume during the fourth quarter of 2020, subject to the negative impact on such resumption that could result from further COVID-19 outbreaks. The eOne team continues to develop new projects and Licensing segment resultswork on animation production, which is being done remotely. The team expects a delay in certain finished episodes and film projects as compared to initial expectations. Additionally, several film release dates have moved into 2021 and in some instances, releases are going straight to video on demand/electronic sell-through windows impacting the 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 $1.1 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 nine months of 2020 were Walmart, Amazon and Target. During this time of uncertainty, however, we are managing our expenses to further preserve our liquidity and while our collections in the third quarter were strong, we continue to closely monitor our customers’ health and nine month periods ended Septembercollectability 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 China, 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 the COVID-19 outbreak and began re-opening 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 and COVID-19 conditions.

The coronavirus outbreak continues to be fluid and uncertain, making it difficult to forecast the impact it could have on our future operations.Please see Part II, Item 1A, Risk Factors, for further information.
The Company’s 2020 results presented in this Form 10-Q include eOne's results of operations and financial position beginning on December 30, 2018 have been restated to reflect2019, the change. In addition to these three primary segments, the Company's product sourcing operationsdate of acquisition. The Company’s 2019 results are managed through its Global Operations segment.



presented as reported and do not include 2019 eOne results.
Third quarter 20192020 highlights:
•Third quarter net revenues of $1,575.2$1,776.6 million increased slightly13% compared to $1,569.7$1,575.2 million in the third quarter of 2018. Excluding $20.5 million of2019. The increase in net revenues included an unfavorable foreign currency translation net revenues grew 2%.of $3.4 million attributable to the Company’s legacy Hasbro business.
•Net revenues in the U.S. and Canada segment increased 9% to $977.1 million; International segment net revenues decreased 8% to $517.0 million, including an unfavorable foreign currency translation impact of $3.3 million; Entertainment, Licensing and Digital segment increased 20%, U.S.net revenues decreased 23% to $89.0 million; and CanadaeOne segment net revenues decreased 2% while the International segmentwere $193.5 million.
•Net revenues from Emerging Brands increased 14%; Franchise Brands net revenues remained flat duringincreased 4%; Hasbro Gaming net revenues increased 3%; and net revenues from Partner Brands decreased 4%; TV, Film and

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
Entertainment portfolio net revenues were $165.7 million and represented 9% of total net revenues in the third quarter of 2019 compared to2020.
•Operating profit was $336.6 million, or 19% of net revenue, in the third quarter of 2018. International segment net revenues were unfavorably impacted by $19.9 million in foreign currency translation. Absent the impact of foreign exchange, International segment net revenues increased 4%.
Net revenues from Partner Brands increased 40%, Franchise Brands and Hasbro Gaming net revenues declined 8% and 17%, respectively, while Emerging Brands net revenues increased slightly during the third quarter of 20192020 compared to the third quarteroperating profit of 2018.
Operating profit decreased to $297.2 million, or 18.9% of net revenue, in the third quarter of 2019 compared to2019.
•Third quarter 2020 operating profit was negatively impacted by acquisition and related expenses of $313.3$5.9 million ($4.7 million after-tax) and $24.7 million ($19.6 million after-tax) of eOne acquired intangible asset amortization.
•Net earnings attributable to Hasbro, Inc. of $220.9 million, or 20.0% of net revenue,$1.61 per diluted share, in the third quarter of 2018.
Net2020 compared to net earnings of $212.9 million, or $1.67 per diluted share, in the third quarter of 2019 compared to2019.
•Third quarter 2020 net earnings included incremental income tax expense of $263.9$13.7 million, or $2.06$0.10 per diluted share, related to a change in the thirdUnited Kingdom ("UK") tax code.
•Third quarter of 2018.
Net2019 net earnings for the third quarter of 2019 included an unrealized foreign currency loss of $25.5 million ($20.9 million after-tax), or 0.16$0.16 per diluted share, related to a partial hedge ofhedging the British Pound sterling purchase price of Entertainment One.
Net earnings for the third quarter of 2018 included a $17.3 million, or $0.14 per share tax benefit within income tax expense, from the interpretation of additional guidance released during the quarter related to U.S. tax reform.

eOne.
First nine months 20192020 highlights:
•Net revenues increased 3%14% to $3,292.2$3,742.5 million in first nine months of 20192020 compared to $3,190.5$3,292.2 million in the first nine months of 2018. Excluding $65.52019. The increase in net revenues included $25.7 million of unfavorable foreign currency translation net revenues grew 5%.attributable to the Company's legacy Hasbro business.
•Net revenues in the U.S. and Canada andsegment remained flat at $1,765.5 million; International segment net revenues decreased 17% to $1,017.2 million; Entertainment, Licensing and Digital segments increased 3% and 23%, respectively, while International segment net revenues declined 1%.decreased 14% to $262.9 million; while eOne segment net revenues were $696.9 million in the first nine months of 2020. International segment net revenues were unfavorably impacted by $63.4$25.1 million in foreign currency translation. Absent the impact of foreign exchange, International segment
•Net revenues from Emerging Brands increased 22%; Hasbro Gaming net revenues increased 5%.
Net revenues from11%; Partner Brands increased 14%, Emerging Brands net revenues increased 11% and Franchise Brands net revenues increased 2%, while Hasbro Gamingeach decreased 10%; and TV, Film and Entertainment portfolio net revenues declined by 11% duringwere $590.4 million representing 16% of total net revenues in the first nine months of 2019 compared to2020.
•Operating profit was $315.5 million, or 8% of net revenues, in the first nine months of 2018.
Operating2020 compared to operating profit increased toof $461.7 million, or 14.0% of net revenues, in the first nine months of 2019 compared to operating2019.
•Operating profit of $320.5 million, or 10.0% of net revenues, in the first nine months of 2018.2020 was negatively impacted by acquisition and related expenses of $166.0 million ($140.7 million after-tax); $72.3 million ($57.5 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.
Operating profit for•Net earnings attributable to Hasbro, Inc. was $117.3 million, or $0.85 per diluted share, in the first nine 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.
Netnet earnings attributable to Hasbro, Inc. of $253.1 million, or $1.99 per diluted share, in the first nine months of 2019 compared to a net2019.
•Net earnings of $211.7 million, or $1.67 per diluted share, in the first nine months of 2018.2020 included incremental income tax expense of $13.7 million, or $0.10 per diluted share, related to a change in the UK tax code.
•Net earnings for the first nine months of 2019 included non-cash charges 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, as well as an unrealized foreign currency loss of $25.5 million ($20.9 million after-tax), or 0.16 per diluted share, related to a partial hedge of the British Pound purchase price of Entertainment One.
The net earnings for the first nine 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 $30.5 million related to guidance issued on U.S. tax reform in 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. Since the Company’s 2019 results are presented as reported and do not include 2019 eOne results, references to the impact of foreign currency exchange on 2020 results exclude the impact to revenues attributable to the Company’s eOne business. 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.

Condensed Notes to Consolidated Financial Statements




Recent Events
During the third quarter(Thousands of 2019, the CompanyDollars and Entertainment One Ltd. ("eOne") entered into a definitive agreement under which Hasbro will acquire all of the outstanding shares of stock of eOne in an all-cash transaction valued at approximately £3.3 billion, or $4 billion based on exchange rates on the agreement date. Under the terms of the agreement, eOne shareholders will receive £5.60 in cash for each common share of eOne. To finance the acquisition, the Company plans to:Shares Except Per Share Data)

Issue $1.0 to $1.25 billion of Hasbro common stock
Issue floating rate term loans and fixed rate notes for the remaining cash consideration

The acquisition of eOne is expected to accelerate the Company’s brand blueprint strategy by adding eOne’s family brands, including PEPPA PIG, PJ MASKS and RICKY ZOOM and brands in development, to Hasbro’s brand portfolio, enhancing Hasbro’s brand development capabilities, and onboarding eOne’s proven television and film expertise and veteran executive leadership.

On August 22, 2019, the Company entered into a debt commitment letter with Bank of America, N.A. (“BofA”) and BofA Securities Inc., pursuant to which BofA (and certain of its affiliates) committed to provide a 364-day senior unsecured bridge loan facility in an aggregate principal amount of up to £3.6 billion to finance the cash consideration and other amounts payable in connection with the Company’s acquisition of eOne.
•
On September 20, 2019, the Company entered into a $1.0 billion Term Loan Agreement with Bank of America, N.A., as administrative agent and certain financial institutions, as lenders, pursuant to which such lenders committed to provide, contingent upon the completion of the acquisition and certain other customary conditions to funding, the Term Loan Facilities in an aggregate principal amount of up to $1.0 billion. Borrowings under the Term Loan Facilities will be used to pay a portion of the cash consideration and other amounts payable in connection with the Company’s acquisition of eOne. See further discussion in Liquidity and Capital Resources section of Item 2 as well as Footnote 1, “Basis of Presentation,” to the Consolidated Financial Statements.
The Company hedged a portion of its exposure to fluctuations in the British pound sterling in relation to the acquisition using a series of both foreign exchange forward and option contracts. These contracts do not qualify for hedge accounting and as such, were marked to market through the Company's Consolidated Statement of Operations. The Company recorded net losses of $25.5 million on these instruments to other (income) expense, net for the quarter and nine month periods ended September 29, 2019.

The transaction, which is structured as a statutory plan of arrangement under the Canada Business Corporations Act, remains subject to receipt of certain regulatory approvals and other customary closing conditions. The transaction has received approval by eOne’s shareholders as well early termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act in the U.S. and antitrust approval in Germany. The transaction is expected to close during the fourth quarter of 2019.
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.August 2020and has maintained this rate for the dividend payment planned for November 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 nine months of 2019, Hasbro repurchased approximately 0.7 million shares at a total cost of $60.1 million and at an average price of $87.18 per share. As of September 29, 2019,27, 2020, the Company had $367.8$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 Company's anticipated financing for its proposed acquisition ofactivities related to the eOne Acquisition, the Company plans to suspendhas suspended its current share repurchase program for the time being. See Footnote 1, “Basis of Presentation,” to the Consolidated Financial Statements for further discussion.while it prioritizes deleveraging.





SUMMARY OF FINANCIAL PERFORMANCE
A summary of the results of operations is illustrated below for the quarter and nine month periods ended September 27, 2020 and September 29, 2019 and September 30, 2018.2019.
Quarter EndedNine Months Ended
September 27, 2020September 29, 2019September 27, 2020September 29, 2019
Net revenues$1,776.6 $1,575.2 $3,742.5 $3,292.2 
Operating profit336.6 297.2 315.5 461.7 
Earnings before income taxes299.2 259.7 183.6 295.4 
Income tax expense79.2 46.8 64.3 42.3 
Net earnings220.0 212.9 119.3 253.1 
Net (loss) earnings attributable to noncontrolling interests(0.9)— 1.9 — 
Net earnings attributable to Hasbro, Inc.220.9 212.9 117.3 253.1 
Diluted earnings per share1.61 1.67 0.85 1.99 
 Quarter Ended Nine Months Ended
 September 29, 2019 September 30, 2018 September 29, 2019 September 30, 2018
Net revenues$1,575.2
 $1,569.7
 $3,292.2
 $3,190.5
Operating profit297.2
 313.3
 461.7
 320.5
Earnings before income taxes259.7
 295.8
 295.4
 275.5
Income tax expense46.8
 31.9
 42.3
 63.9
Net earnings212.9
 263.9
 253.1
 211.7
Diluted earnings per share1.67
 2.06
 1.99
 1.67
RESULTS OF OPERATIONS – CONSOLIDATED

Third Quarter of 2020
The quarters ended September 27, 2020 and September 29, 2019 were each 13-week periods.
Consolidated net revenues for the third quarter of 20192020 increased slightly$201.4 million, or 13%, compared to the third quarter of 20182019 and includedreflect the inclusion of eOne revenues of $193.5 million which represent 11% of consolidated net revenues for the quarter. Third quarter 2020 net revenues include a $3.4 million unfavorable impact of an unfavorable $20.5 millionfrom foreign currency translation as a result of weakerweakening currencies, primarily in the European,Company's Latin American and Asia Pacificmarkets, partially offset by favorable foreign currency translation from European markets in 2019 compared to 2018. Absent the impact of foreign exchange during the third quarter of 2019, net revenues grew 2%.2020 compared to 2019.
Operating profit for the third quarter of 20192020 was $297.2$336.6 million, or 18.9%19% of net revenues, compared to operating profit of $313.3$297.2 million, or 20.0%19% of net revenues, for the third quarter of 2018.2019. Operating profit results during the third quarter of 2019 included an unfavorable $4.12020 reflects the consolidation of eOne results of operations and was negatively impacted by acquisition and related costs of $5.9 million impact from foreign exchange translation.($4.7 million after-tax) and $24.7 million ($19.6 million after-tax) of expenses related to eOne acquired intangible asset amortization.
The quarters ended September 29, 2019 and September 30, 2018 were each 13-week periods. Net earnings decreasedattributable to Hasbro, Inc. were $220.9 million for the third quarter of 2020 compared to net earnings of $212.9 million for the third quarter of 2019 compared2019.  Diluted earnings per share attributable to net earnings of $263.9 millionHasbro, Inc. for the third quarter of 2018.  Diluted2020 was $1.61, compared to diluted earnings per share forof $1.67 in the third quarter of 2019 was $1.67, down fromand reflects the negative impact of eOne acquired intangible asset amortization of $0.14 per diluted earnings per share, of $2.06incremental income tax expense related to a change in the thirdUK tax code of $0.10 per diluted share and acquisition and related costs of $0.03 per diluted share. Third quarter of 2018. Net2019 net earnings for the three months ended September 29, 2019 includes a net of taxincluded an unrealized foreign currency loss of $20.9 million, or $0.16 per diluted share, related to foreign exchange forward and option contracts that were entered into, to limithedging the British Pound sterling purchase price of eOne.
As a result of the 2020 acquisition of eOne, the Company's exposure to foreign currency fluctuations associated withbrand architecture reflects the proposedaddition of the TV, Film and Entertainment brand portfolio which consists of legacy eOne acquisition purchase price. Net earnings for the three months ended September 30, 2018 included a tax benefit of $17.3 million, or $0.14 per share,film and TV revenues. Revenues related to eOne brands, including PEPPA PIG, PJ MASKS and RICKY ZOOM, are reported in the interpretation of additional guidance released on U.S. tax reform in 2018.Emerging Brands portfolio.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
The following table presents net revenues by brand and entertainment portfolio for the quarters ended September 27, 2020 and September 29, 2019 and September 30, 2018.
2019.
Quarter EndedQuarter Ended
September 29, 2019 September 30, 2018 %
Change		September 27, 2020September 29, 2019%
Change
Franchise Brands$779.7
 847.7
 -8 %Franchise Brands$807.6 779.7 4 %
Partner Brands427.0
 305.8
 40 %Partner Brands409.2 427.0 -4 %
Hasbro Gaming232.3
 280.8
 -17 %Hasbro Gaming239.2 232.3 3 %
Emerging Brands136.2
 135.3
 1 %Emerging Brands155.0 136.2 14 %
TV, Film and EntertainmentTV, Film and Entertainment165.7 — 100 %
Total$1,575.2
 1,569.7
 0 %Total$1,776.6 1,575.2 13 %
FRANCHISE BRANDS: Net revenues in the Franchise Brands portfolio decreased 8%increased 4% in the third quarter of 20192020 compared to the third quarter of 2018. Lower net revenues from NERF, MY LITTLE PONY and BABY ALIVE products were partially offset by higher net revenues2019. Net revenue increases from MAGIC: THE GATHERING and MONOPOLY products, duringdrove the majority of the increase in the third quarter of 2019.2020, and were partially offset by net revenue declines from TRANSFORMERS, NERF and MY LITTLE PONY products. During the third quarter of 2020, MAGIC: THE GATHERING products benefited from a favorable card set release cadence while 2019 net revenues from TRANSFORMERS products were supported by the theatrical release of



TRANSFORMERS: BUMBLEBEE.
PARTNER BRANDS: Net revenues from the Partner Brands portfolio increased 40%decreased 4% in the third quarter of 20192020 compared to the third quarter of 2018.2019.  Partner Brands net revenues are reliant on related entertainment, including television and movie releases. During the third quarter of 2020, the Company’s Partner Brands portfolio was supported by the highly anticipated Disney+ streaming series, STAR WARS: THE MANDALORIAN, season two, expected to be released during the fourth quarter of 2020 and TROLLS WORLD TOUR, which was released in the premium video-on-demand formatin April. During the third quarter of 2019, the Company’s Partner Brands portfolio was supported by MARVEL’S April 2019 theatrical release, AVENGERS: END GAME . In addition to this film,and product sales in anticipation of the Company’sNovember 2019 Partner Brand theatrical releases includerelease of DISNEY’S FROZEN 2 expected. Due to the uncertainty surrounding the ongoing COVID-19 pandemic, heading into the fourth quarter of 2020, a significant number of movie theaters have remained closed worldwide. As a result, certain theatrical releases in Novembersupport of the Company's Partner Brand products, including BLACK WIDOW from DISNEY'S MARVEL franchise and STAR WARS: THE RISE OF SKYWALKERGHOSTBUSTERS: AFTERLIFE, previously planned as 2020 releases, have been postponed and are expected to be in December. Net revenue increases from DISNEY FROZEN, and MARVEL products as well as increases from STAR WARS and DISNEY’S DECENDANTS products, were partially offset by net revenue declines from DISNEY PRINCESS, BEYBLADE and DREAMWORKS’ TROLLS productstheaters during the third quarterfirst half of 2019.2021, subject to COVID-19 impacts at that time.
HASBRO GAMING: Net revenues in the Hasbro Gaming portfolio decreased 17%increased 3% in the third quarter of 20192020 compared to the third quarter of 2018. Lower net revenues from PIE FACE and SPEAK OUT and certain other Hasbro Gaming products were partially offset by higher2019. Higher net revenues from DUNGEONS & DRAGONS products and higher net revenues from classic games including, JENGA and CLUE products were partially offset by lower net revenues from DON'T STEP IN IT and certain other gamesHasbro Gaming products in the third 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 revenues from MAGIC: THE GATHERING and MONOPOLY products, which are included in the Franchise Brands portfolio, totaled $449.4$543.1 million for the third quarter of 2019, increasing slightly when2020, an increase of 21%, as compared to $447.8$449.4 million in the third quarter of 2018.2019. The increase relates primarily to the timing of MAGIC: THE GATHERING product releases during the third quarter of 2020 compared to the same period in 2019.
EMERGING BRANDS: Net revenues from the Emerging Brands portfolio increased 1%14% during the third quarter of 20192020 compared to the third quarter of 2018.2019. Contributing to the net revenue increases duringwere the third quarterinclusion of 2019 were POWER RANGERSbrands acquired through the eOne Acquisition including PEPPA PIG and PJ MASKS and the addition of net revenues from GI JOE products, due to the Company's product-line relaunch in 2020, as well as net revenue increases from PLAYSKOOL including MR. POTATO HEAD products.products during the third quarter of 2020. These increases were partially offset by declines in POWER RANGERS and LITTLEST PET SHOP LOST KITTIES and FURREAL FRIENDS products during the third 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.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
During the third quarter of 2020, net revenues from the TV, Film and Entertainment portfolio were approximately 9% of total Company net revenues. The drivers of net revenues from the TV, Film and Entertainment portfolio included television production and distribution net revenues from the fifth season of FEAR THE WALKING DEAD, airing on the AMC television network, and film distribution revenues from the Amblin Partners film 1917, released in December 2019, as well as 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 including the American reality series, NAKED AND AFRAID airing on the Discovery Channel and from its library of subscription video on demand ("SVOD") content.
First Nine Months of 2020
The nine month periods ended September 27, 2020 and September 29, 2019 were each 39-week periods.
For the first nine months of 2019,2020, consolidated net revenues increased 3%14% compared to the first nine months of 2018.2019 and reflect the inclusion of eOne revenues of $696.9 million which represents 19% of consolidated net revenues for the period. The net revenue increase in the first nine months of 20192020 included an unfavorable variance of $65.5$25.7 million as a result of foreign currency translation due to weaker currencies across the Company's internationalLatin American and to a lesser extent, Asia Pacific markets, when compared to the first nine months of 2018. Absent the impact of foreign exchange, consolidated net revenues increased 5% in the first nine months of 2019.
Operating profit for the first nine months of 2019 increased2020 was $315.5 million, or 8.4% of net revenues, compared to an operating profit of $461.7 million, or 14.0% of net revenues, from $320.5 million, or 10.0% of net revenues, for the first nine months of 2018.2019. Operating profit results during the first nine months of 2019 included an unfavorable $10.02020 reflects the consolidation of eOne results of operations and was negatively impacted by acquisition and related costs of $166.0 million impact from foreign exchange translation. Operating profit($140.7 million after-tax); $72.3 million ($57.5 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 earnings attributable to Hasbro, Inc. were $117.3 million for the first nine months of 2020 compared to net earnings of $253.1 million for the first nine months of 2019. Diluted earnings per share attributable to Hasbro, Inc. were $0.85 in the first nine months of 2018 was negatively impacted by the loss2020, compared to diluted earnings per share of revenues and incremental bad debt expense associated with the Toys“R”Us liquidations$1.99 in the U.S.first nine months of 2019. Net earnings attributable to Hasbro, Inc. for the first nine months of 2020 reflect the negative impact of acquisition related costs and U.K.,eOne acquired intangible asset amortization of $1.02 per diluted share and $0.42 per diluted share, respectively, as well as severance costsincremental income tax expense related to a change in the UK tax code of $0.10 per diluted share and restructuring charges associated with the Company’s 2018 restructuring program.
The nine month periods ended September 29, 2019 and September 30, 2018 were each 39-week periods.cost savings initiatives of $0.07 per diluted share. Net earnings for the first nine months of 2019 were $253.1 million compared to a net earnings of $211.7 million for the first nine months of 2018. Diluted earnings per share was $1.99 in the first nine months of 2019, up from diluted earnings per share of $1.67 in 2018. Net earnings for the nine months ended September 29, 2019 includesincluded 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 liability and a $20.9 million loss, net of tax, or $0.16 per diluted share related to unrealized losses on foreign exchange forward contracts and option contracts purchased to hedge the foreign exposure associated with the purchase price of Entertainment One Ltd. Net earnings for the first nine months 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 $30.5 million, or $0.24 per diluted share, related to U.S. tax reform and additional guidance issued in 2018.



eOne.
The following table presents net revenues by product category for the first nine months of 20192020 and 2018.2019.
Nine Months Ended
September 27, 2020September 29, 2019%
Change
Franchise Brands$1,580.9 1,749.9 -10 %
Partner Brands729.8 812.5 -10 %
Hasbro Gaming516.3 463.3 11 %
Emerging Brands325.1 266.5 22 %
TV, Film and Entertainment590.4 — 100 %
Total$3,742.5 3,292.2 14 %
 Nine Months Ended
 September 29, 2019 September 30, 2018 %
Change
Franchise Brands$1,749.9
 1,716.0
 2 %
Partner Brands812.5
 714.4
 14 %
Hasbro Gaming463.3
 520.3
 (11)%
Emerging Brands266.5
 239.7
 11 %
Total$3,292.2
 3,190.5
 3 %

FRANCHISE BRANDS: Net revenues in the Franchise Brands portfolio increased 2%decreased 10% in the first nine months of 20192020 compared to 2018.  Higher2019. Declines in net revenues from TRANSFORMERS and NERF products drove the overall decline in Franchise Brands net revenues, while, to a lesser extent, MY LITTLE PONY and PLAY-DOH products also contributed to segment net revenue declines. Much of the segment net revenue decline was due to reduced customer ordering, supply chain delays and other disruptions to the business as a result of the impact of the COVID-19 pandemic. Additionally, TRANSFORMERS products benefited from the December 2018 theatrical release of TRANSFORMERS: BUMBLEBEE in 2019, driving lower revenues in 2020 compared to 2019. These declines were partially offset by net revenue increases from MAGIC: THE GATHERING and MONOPOLY products andduring the first nine months of 2020, due to a lesser extent, PLAY-DOHfavorable card set release cadence.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and TRANSFORMERS products, were partially offset by lower net revenues from NERF, MY LITTLE PONY and BABY ALIVE products.Shares Except Per Share Data)
PARTNER BRANDS: Net revenues from the Partner Brands portfolio increased 14%decreased 10% during the first nine months of 20192020 compared to 2018.2019. Partner Brands net revenues are reliant on related entertainment, including television and movie releases.
During the first nine months 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 nine 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. The Company’s 2020 Partner Brand entertainment releases include TROLLS WORLD TOUR, which was released in the premium video-on-demand formatin April and the highly anticipated Disney+ streaming series, STAR WARS: THE MANDALORIAN, season two, expected to be released during the fourth quarter of 2020. During the first nine months 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.
During the first nine months of 2020, net revenue declines from MARVEL and BEYBLADE products were partially offset by net revenue increases from STAR WARS and DREAMWORKS' TROLLS products. The majority of Partner Brand net revenue declines were attributable to MARVEL products which are dependent on entertainment releases as described above. Due to the impact of the COVID-19 pandemic on the entertainment industry during 2020, including the postponement of certain theatrical releases such as BLACK WIDOW, previously planned as a 2020 MARVEL release, the Company's MARVEL products associated with related entertainment experienced a decline during the nine months ended 2020 as compared to the first nine months of 2019 which benefited from a successful entertainment slate including theatrical release, AVENGERS: END GAME in APRIL. In addition to this film, the Company’s 2019 Partner Brand theatrical releases include DISNEY’S FROZEN 2 expected in NovemberApril 2019. Net revenue increases from STAR WARS and STAR WARS: THE RISE OF SKYWALKER in December. During the first nine months of 2019, the increase was driven by higher net revenues from DISNEY FROZEN and MARVEL products, as well as net revenue contributions from the introduction of the Company's line of UGLY DOLLS and OVERWATCHDREAMWORKS' TROLLS products during the first nine months of 2019 compared2020 were attributable to the same period in 2018. These increases were partially offset by lower net revenues from STAR WARS products ahead of the planned fourth quarter 2019 filmentertainment release support described above, as well as net revenue declines from DREAMWORKS’ TROLLS and DISNEY PRINCESS products.above.
HASBRO GAMING: Net revenues in the Hasbro Gaming portfolio decreasedincreased 11% in the first nine months of 20192020 compared to the first nine months of 2018. Increased2019 led by increased net revenues from DUNGEONS & DRAGONS and JENGA products were more than offset by lower net revenuesand to a lesser extent, from PIE FACE and SPEAK OUT products.certain other Hasbro Gaming brands.
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 towere $1,202.6 million, an increase of 11%, in the first nine months of 2020 versus $1,086.2 million in the first nine months of 2019 versus $964.2 million in the first nine months of 2018.2019.
EMERGING BRANDS: Net revenues from the Emerging Brands portfolio grew 11%22% for the first nine months of 20192020 compared to the first nine months of 2018.2019. Net revenues fromContributing to the introduction of the Company's POWER RANGERS products, as well as net revenue increases in the first nine months of 2020 were the inclusion of brands acquired through the eOne Acquisition including PEPPA PIG and PJ MASKS and the addition of net revenues from PLAYSKOOLGI JOE products in 2020, due to the Company's product-line relaunch. These net revenue increases were partially offset by net revenue declines from LITTLEST PET SHOP and LOST KITTIESFURREAL FRIENDS products.

TV, FILM and ENTERTAINMENT: Net revenues from the TV, Film and Entertainment portfolio were approximately 16% of total Company net revenues and included theatrical contributions from the Amblin Partners film 1917, released in December 2019, television production and distribution net revenues from the fifth season of FEAR THE WALKING DEAD, airing on the AMC television network 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 included 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 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

Condensed Notes to Consolidated Financial Statements
(Thousands of the realignment of the Company’s financial reporting segments, 2018 net revenuesDollars 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.Shares Except Per Share Data)



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

Third Quarter of 20192020
The following table presents net external revenues and operating profit data for the Company's three principal segments for the quarters ended September 29, 201927, 2020 and September 30, 2018:
29, 2019:
 Quarter Ended
 September 29, 2019 September 30, 2018 %
Change
Net Revenues *
     
U.S. and Canada segment$898.3
 $912.2
 -2 %
International segment561.1
 560.7
 — %
Entertainment, Licensing and Digital segment115.8
 96.8
 20 %
      
Operating Profit *
     
U.S. and Canada segment$193.7
 $223.1
 -13 %
International segment67.2
 66.3
 1 %
Entertainment, Licensing and Digital segment24.6
 37.1
 -34 %
*For the quarter ended September 30, 2018, revenues of $12.0 million, and operating profit of $3.5 million, were reclassified from the U.S. and Canada segment to the Entertainment, Licensing and Digital segment.
Quarter Ended
September 27, 2020September 29, 2019%
Change
Net Revenues
U.S. and Canada segment$977.1 $898.3 9 %
International segment517.0 561.1 -8 %
Entertainment, Licensing and Digital segment89.0 115.8 -23 %
eOne segment193.5 — 100 %
Operating Profit (Loss)
U.S. and Canada segment$263.0 $193.7 36 %
International segment63.9 67.2 -5 %
Entertainment, Licensing and Digital segment32.8 24.6 33 %
eOne segment(25.9)— -100 %
U.S. and Canada Segment
The U.S. and Canada segment net revenues increased 9% for the third quarter of 2019 declined 2%2020 compared to the third quarter of 2018.2019. Net revenues declined inrevenue increases from the Company's Franchise Brands and Hasbro Gaming portfolios, partially offset by net revenue increases in the PartnerEmerging Brands portfolio and to a lesser extent, the EmergingHasbro Gaming portfolio, were partially offset by lower net revenues from the Partner Brands portfoliosportfolio during the third quarter of 2019. The implemented and proposed tariffs on certain U.S. products negatively impacted revenues2020.
Net revenue increases in the third quarter of 2019.
In theCompany's Franchise Brands portfolio lower net revenues from NERF, BABY ALIVE, TRANSFORMERS and MY LITTLE PONY products were partially offsetdriven by net revenue increases from MAGIC: THE GATHERING products which benefited from a favorable card set release cadence in 2020, and to a lesser extent, PLAY-DOH and MONOPOLY products. In the Partner Brands portfolio, entertainment releases including the highly anticipated Disney+ streaming series, STAR WARS: THE MANDALORIAN, season two, expected in the fourth quarter 2020 and TROLLS WORLD TOUR, released in the premium video-on-demand formatin April, resulted in higher net revenues from DISNEY FROZEN, STAR WARS and MARVEL products and to a lesser extent, DISNEY’S DECENDANTS products, DREAMWORKS' TROLLS products. These increases were partiallymore than offset by net revenue decreases from BEYBLADEDISNEY FROZEN and DISNEY PRINCESSMARVEL products, which were not supported by entertainment releases during the third quarter of 2019.2020. In addition, net revenues from MARVEL products were negatively impacted during the third quarter of 2020 due to delays in theatrical releases as a result of the impact of COVID-19. In the Hasbro Gaming portfolio, lowerhigher net revenues were delivered across many of the Company's games brands, most notably from PIE FACEJENGA and certain other Hasbro Gaming brands products were partially offset by increased net revenues from DUNGEONSDUNGEON & DRAGONS products. In the Emerging Brands portfolio, the addition ofhigher net revenues from PLAYSKOOL products and net revenues from the Company’s POWER RANGERS products, as well as net revenue increases from PLAYSKOOL products, were partially offset by net revenue declines from LITTLEST PET SHOP and FURREAL FRIENDS products during2020 relaunch of the third quarter of 2019.Company's GI JOE product line drove growth.
U.S. and Canada segment operating profit for the third quarter of 20192020 was $193.7$263.0 million or 27% of segment net revenues, compared to segment operating profit of $223.1$193.7 million or 22% of segment net revenues, for the third quarter of 2018.2019. The operating profit decreaseincrease in the third quarter of 2020 was driven by higher segment net revenues as described above and favorable brand mix, partially offset by increased administrative and product development expenses associated with the Company's Wizards of the Coast business, as well as higher freight costs from increased domestic shipments and higher direct-to-customer shipments which carry elevated fulfillment costs.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
International Segment
International segment net revenues declined 8% in the third quarter of 2020 to $517.0 million from $561.1 million in the third quarter of 2019 was driven by lower revenues and increases in Partner Brand sales, which carry higher royalty expenses and result in lower operating profit.



In addition, the segment recorded higher shipping and warehousing expenses as a result of implemented and proposed tariffs on U.S. products.
International Segment
International segment net revenues were essentially flat in the third quarter of 2019. Absentincluded the impact of foreign exchange, International segment net revenues increased $20.3an unfavorable $3.3 million or 4% during the third quarter of 2019.currency translation. The following table presents net revenues by geographic region for the Company's International segment for the quarters ended September 29, 201927, 2020 and September 30, 2018.
29, 2019.
Quarter EndedQuarter Ended
September 29, 2019 September 30, 2018 %
Change		September 27, 2020September 29, 2019%
Change
Europe$319.3
 331.4
 -4 %Europe$343.2 319.3 7 %
Latin America152.0
 145.7
 4 %Latin America91.6 152.0 -40 %
Asia Pacific89.9
 83.6
 7 %Asia Pacific82.2 89.9 -9 %
Net revenues$561.1
 560.7
 — %Net revenues$517.0 561.1 -8 %
Unfavorable foreign currency translation impacted the Company's major geographic regions as follows: Europe - $11.7 million, Latin America - $6.1 million and Asia Pacific - $2.1 million. Absent the unfavorable foreign currency translation, net revenues for the third quarter of 2019 were flatThe decline in Europe, up 9% in Latin America and up 10% in the Company’s Asia Pacific region. International segment net revenues from Partner Brands grew, net revenues from Franchise Brands and Hasbro Gaming declined while Emerging Brands net revenues remained relatively flat during the third quarter of 20192020 was attributable to ongoing disruptions to the business related to the COVID-19 pandemic, most notably in the Latin American and Asia Pacific regions, where large numbers of retail stores remain closed. The Latin American region was also unfavorably impacted by $14.6 million in foreign exchange translation, partially offset by a favorable foreign currency translation impact of $9.9 million and $1.4 million in the Company's European and Asia Pacific regions, respectively. International segment net revenues declined in the Company's Franchise Brands, Emerging Brands and Partner Brands portfolios while net revenues from the Hasbro Gaming portfolio increased during the third quarter of 2020 compared to the third quarter of 2018.2019.  In the Franchise Brands portfolio, higherInternational segment net revenuesrevenue declines were noted in NERF and TRANSFORMERS products and to a lesser extent, from MAGIC: THE GATHERINGBABY ALIVE and MONOPOLY products, were more than offset by lower net revenues from MY LITTLE PONY TRANSFORMERS and BABY ALIVE products. In the Partner Brands portfolio, net revenue increases from DISNEY FROZEN and MARVEL products were partially offset by net revenue declines in DISNEY PRINCESS products. In the Hasbro Gaming portfolio, net revenue declines in PIE FACE productsThese decreases were partially offset by net revenue increases from DUNGEONS & DRAGONS products.MAGIC: THE GATHERING products, due to the timing of card set releases and strong brand engagement during the third quarter of 2020. In the Partner Brands portfolio, the drivers of the decreases include BEYBLADE products as well as MARVEL products, which were negatively impacted during the third quarter of 2020 due to delays in theatrical releases as a result of the impact of COVID-19. These decreases were partially offset by net revenue increases from STAR WARS and to a lesser extent, DREAMWORKS' TROLLS products which were supported by entertainment releases including STAR WARS: THE MANDALORIAN, season two, expected during the fourth quarter 2020 and TROLLS WORLD TOUR, which was released in the premium video-on-demand formatin April from DREAMWORKS. In the Hasbro Gaming portfolio, higher net revenues from CLUE, JENGA and OPERATION products were partially offset by lower net revenues from certain other Hasbro Gaming products, including PIE FACE. In the Emerging Brands portfolio, net revenue contributionsrevenues declined from POWER RANGERS, products were offset by lower net revenues from LITTLEST PET SHOP FURREAL FRIENDS and certain other Emerging BrandsPLAYSKOOL products in the third quarter of 2019.2020.
International segment operating profit was $67.2$63.9 million, or 12% of segment net revenues for the third quarter of 2019,2020, compared to operating profit of $66.3$67.2 million, or 12% of segment net revenues, for the third quarter of 2018. The increase in2019. International segment operating profit declines during the third quarter of 2019 was2020 were the result of lower advertising and product development costs,sales described above, most notably in the Company's Latin American region, partially offset by higher royalty expense as a result of increased Partner Brand salesfavorable product mix and higher intangible asset amortization expense.lower advertising and marketing costs.
Entertainment, Licensing and Digital Segment
Entertainment, Licensing and Digital segment net revenues increased 20%declined 23% to $89.0 million for the third quarter of 2020, compared to $115.8 million for the third quarter of 2019,2019. Net revenue declines were primarily driven by lower film revenues in 2020 compared to $96.8 million for2019, related to the TRANSFORMERS: BUMBLEBEE film and, lower revenues during the third quarter of 2018. Revenue growth was primarily driven2020 due to the closure of the Backflip business in the fourth quarter of 2019. These declines were partially offset by higher licensed digital gaming revenue and increased revenues related to MAGIC: THE GATHERING ARENA, which launched out of open beta late in the third quarter of 2019. In addition, the segment realized film revenues from Transformers:Bumblebee which were partially offset by lower television programming revenues for Hasbro television programming during the third quarter of 2019..
Entertainment, Licensing and Digital segment operating profit decreasedincreased to $24.6$32.8 million, or 37% of segment net revenues for the third quarter of 2019,2020, from $37.1$24.6 million, or 21.2% of segment net revenues for the third quarter of 2018.2019. The decreaseincrease in Entertainment, Licensing and Digital segment operating profit was driven primarily driven by higher program production amortization as well as increasedfavorable mix from growth in licensed digital gaming, reduction of expenses due to the closure of the Backflip business and lower advertising development and administration costs forassociated with MAGIC: THE GATHERING ARENA.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and other digital gaming initiatives. Shares Except Per Share Data)
eOne Segment
During the third quarter of 2018, Entertainment, Licensing2020, eOne segment net revenues were $193.5 million. The following table presents eOne segment net revenues by channel for the quarter ended September 27, 2020.
Three Months Ended
September 27, 2020
eOne Segment Net Revenues
          Film and TV$138.5 
          Family Brands26.3 
          Music and Other28.7 
Segment Total$193.5 
The COVID-19 outbreak continued to impact the Company's eOne segment during the third quarter of 2020. Specifically, certain scheduled productions have been delayed due to the shutdown of production work and Digitalthe closure or limited reopening of studios. Additionally, certain 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 third quarter of 2020, drivers of 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 the fifth season of FEAR THE WALKING DEAD and season two of THE ROOKIE; (iii) film distribution revenues from the Amblin Partners film 1917, released in December 2019; and (iv) the Company's strong lineup of unscripted television programming as well as demand for the Company's vast SVOD library. In addition to these entertainment driven revenues, the Company's music business benefited from both streaming and publishing revenues during the third quarter of 2020.
eOne segment operating profit benefited from higherlosses were $25.9 million, or 13.4% of segment net revenues and resulting higher operating profitfor the third quarter of 2020. This loss was driven by $24.7 million of incremental intangible amortization costs related to content delivered under a multi-year digital streaming deal signedthe intangible assets acquired in the third quarter.eOne Acquisition.
Global Operations
The Global Operations segment operating profit of $5.7 million for the third quarter of 2020 compared to an operating profit of $11.1 million for the third quarter of 2019 compared to an operating profit of $3.22019.
Corporate and Eliminations
Operating losses in Corporate and Eliminations totaled $2.9 million for the third quarter of 2018.
Corporate and Eliminations
The2020 compared to operating profit in Corporate and Eliminations totaledof $0.6 million for the third quarter of 2019 compared to operating2019. Operating losses of $16.3 million forin the third quarter of 20182020 were driven primarily by cost-saving initiatives implemented as a resultacquisition and integration costs of $4.6 million and certain restructuring and related costs of $1.3 million associated with the Company's 2018 restructuring program.acquisition of eOne.

Condensed Notes to Consolidated Financial Statements

(Thousands of Dollars and Shares Except Per Share Data)


First Nine Months of 20192020
The following table presents net revenues and operating profit (loss) for the Company's three principal segments for each of the nine monthsmonth periods ended September 29, 201927, 2020 and September 30, 2018.29, 2019.
 Nine Months Ended
 September 29, 2019 September 30, 2018 %
Change
Net Revenues*     
U.S. and Canada segment$1,766.6
 $1,714.5
 3 %
International segment1,221.2
 1,229.1
 -1 %
Entertainment, Licensing and Digital segment304.3
 246.7
 23 %
     

Operating Profit *    

U.S. and Canada segment$313.8
 $269.5
 16 %
International segment51.4
 10.4
 >100%
Entertainment, Licensing and Digital segment62.6
 76.0
 -18 %
*For the nine months ended September 30, 2018, revenues of $33.3 million, and operating profit of $9.8 million, were reclassified from the U.S. and Canada segment to the Entertainment, Licensing and Digital segment.
Nine Months Ended
September 27, 2020September 29, 2019%
Change
Net Revenues
U.S. and Canada segment$1,765.5 $1,766.6 — %
International segment1,017.2 1,221.2 -17 %
Entertainment, Licensing and Digital segment262.9 304.3 -14 %
eOne segment696.9 — 100 %
Operating Profit (Loss)
U.S. and Canada segment$359.0 $313.8 14 %
International segment12.3 51.4 -76 %
Entertainment, Licensing and Digital segment65.8 62.6 5 %
eOne segment(65.0)— -100 %
U.S. and Canada Segment
The U.S. and Canada segment net revenues remained flat for the nine months ended September 29, 2019 increased 3%27, 2020 compared to 2018.the same period in 2019, which reflects recovery in the third quarter from negative impacts realized in the first half of 2020, driven in part by disruptions to the Company's business operations as a result of COVID-19. In the first nine months of 2019,2020, higher net revenue increasesrevenues in the Partner Brands and Emerging Brands portfoliosHasbro Gaming portfolio were partiallywholly offset by lower net revenues in the Franchise Brands, Partner Brands and Hasbro GamingEmerging Brands portfolios.
In the Franchise Brands portfolio, net revenue increasesrevenues declined from MAGIC: THE GATHERING,NERF, PLAY-DOH MONOPOLY and TRANSFORMERS products, were more than offset by lower net revenues from NERF, BABY ALIVE and MY LITTLE PONY products. Indue in part to disruptions to the Partner Brands portfolio, higher net revenues from DISNEY FROZEN and MARVEL products,business, as well as net revenue contributions from the introductiona result of the Company's UGLYDOLL and OVERWATCH products were partially offset by net revenueimpact of the COVID-19 pandemic. These declines from DREAMWORKS’ TROLLS products. In the Hasbro Gaming portfolio, lower net revenues from PIE FACE, SPEAK OUT and certain other Hasbro Gaming products were partially offset by higher net revenues from MAGIC: THE GATHERING products which benefited from a favorable card set release cadence and strong brand engagement in 2020. In the Partner Brands portfolio, the decrease was driven by lower net revenues from MARVEL and DISNEY FROZEN products which did not have the benefit of 2020 entertainment releases. These decreases were partially offset by net revenue increases from STAR WARS and TROLLS products as a result of entertainment support from the anticipated Disney+ streaming series, STAR WARS: THE MANDALORIAN, season two, expected to be released during the fourth quarter 2020 and TROLLS WORLD TOUR, which was released in the premium video-on-demand formatin April. In the Hasbro Gaming portfolio, higher net revenues were delivered across multiple brands, most notably DUNGEONS & DRAGONS and DUEL MASTERSJENGA products. In the Emerging Brands portfolio, net revenue contributionsdeclines from the introduction of the Company'sFURREAL FRIENDS and POWER RANGERS products, as well as net revenue increases from 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 and higher net revenues from PLAYSKOOL products during the first nine months of 2020.
U.S. and Canada segment operating profit for the nine months ended September 29, 201927, 2020 increased to $313.8$359.0 million, or 17.8%20% of segment net revenues, compared to $269.5$313.8 million, or 15.7%18% of segment net revenues, for the nine months ended September 30, 2018.29, 2019. The increase in operating profit in the first nine months of 20192020 was driven by higher net revenues from MAGIC: THE GATHERING products, lower marketing and favorable product mix,advertising costs and reduced administrative costs as a result of cost-savings initiatives, partially offset by higher royalty expenses from increased Partner Brands sales,freight costs as a result of higher warehousing and shipping costs associated with opening a new Midwestern U.S. warehousedomestic shipments and increased domestic shipping in 2019, as well asdirect-to-customer shipments which carry higher intangible asset amortization costs associated with the Power Rangers brand acquisition. The operating profit in the first nine monthsfulfillment costs.

Condensed Notes to Consolidated Financial Statements
(Thousands of 2018 included expenses of $52.3 million related to the Toys“R”Us liquidation in the U.S.Dollars and Shares Except Per Share Data)



International Segment
International segment net revenues decreased 1%17% to $1,017.2 million for the nine months ended September 27, 2020 from $1,221.2 million for the nine months ended September 29, 2019 from $1,229.1 million for the nine months ended September 30, 2018. Absentand included an unfavorable $63.4$25.1 million impact offrom foreign exchange, International segment net revenues increased $55.5 million or 5% during the first nine months of 2019.currency exchange. The following table presents net revenues by geographic region for the Company's International segment for the nine month periods ended September 29, 201927, 2020 and September 30, 2018.29, 2019.
 Nine Months Ended
 September 29, 2019 September 30, 2018 %
Change
Europe$673.7
 686.5
 -2 %
Latin America305.1
 308.1
 -1 %
Asia Pacific242.4
 234.5
 3 %
Net revenues$1,221.2
 1,229.1
 -1 %

Nine Months Ended
September 27, 2020September 29, 2019%
Change
Europe$663.1 673.7 -2 %
Latin America158.0 305.1 -48 %
Asia Pacific196.1 242.4 -19 %
Net revenues$1,017.2 1,221.2 -17 %
Foreign currency translation negatively impacted the major geographic regions as follows: Europe - $37.4 million, Latin America - $16.1 millionAmerican and Asia Pacific - $9.9 million. Absentregions by $25.0 million and $2.6 million respectively, partially offset by a favorable foreign currency translation the underlying business grew across all major geographic regions, up 4%impact of $2.5 million in Europe 4% in Latin America and 8% in Asia Pacific. International segment net revenues from Partner Brands and Emerging Brands grew while Franchise Brands and Hasbro Gaming net revenues declined during the first nine months of 20192020. International segment net revenues declined from Franchise Brands, Partner Brands, and Emerging Brands while the Hasbro Gaming portfolio remained flat during the first nine months of 2020 compared to 2018.2019.  The declines in Franchise Brands were driven by lower sales from MY LITTLE PONY and NERF products partially offset by higher net revenues from MAGIC: THE GATHERING and MONOPOLY products.  In the Partner Brands portfolio, higher net revenues from MARVEL and DISNEY FROZEN products were partially offset byresult of lower net revenues from STAR WARSNERF products, followed by net revenue declines from TRANSFORMERS and DISNEY PRINCESSPLAY-DOH products and to a lesser extent, MY LITTLE PONY products. In the Hasbro Gaming portfolio, lower net revenues from PIE FACE and SPEAK OUT productsThese declines were partially offset by net revenue increases from CONNECT 4MAGIC: THE GATHERING products. The overall net revenue declines were in part, due to disruptions to the business, and to consumer purchasing patterns, as a result of the COVID-19 pandemic, most notably in the Company's Latin American region and, to a lesser extent, certain areas within its Asia Pacific region. During the first nine months of 2020, MAGIC: THE GATHERING products benefited from a favorable card set release cadence and increased demand compared to 2019. In the Partner Brands portfolio, the decrease was primarily driven by lower net revenues from MARVEL products which did not have the benefit of 2020 entertainment releases, as well as lower net revenues from the Company's BEYBLADE products. These decreases were partially offset by higher net revenues from DREAMWORKS’ TROLLS and STAR WARS products, which were supported by 2020 entertainment, as well as higher net revenues from DISNEY FROZEN products. In the Hasbro Gaming portfolio, net revenue increases from CLUE, JENGA and DUNGEONS & DRAGONS products, were offset by lower net revenues from PIE FACE and certain other Hasbro Gaming products. In the Emerging Brands portfolio, contributions from the introduction of the Company's POWER RANGERS products, as well as net revenue increases from PLAYSKOOL productsdeclines were partially offsetdriven by lower net revenues from LITTLEST PET SHOP and FURREAL FRIENDSPLAYSKOOL products induring the first nine months of 2019.2020.
International segment operating profit was $51.4$12.3 million, or 1% of segment net revenues, for the first nine months of 2019, up from2020, compared to operating profit of $10.4$51.4 million, or 4% of segment net revenues, for the first nine months of 2018.2019. The improvementdecrease in International segment operating results for the first nine months of 2019 was the result of lower administrative, advertising and product development costs as well as lower distribution costs offset by higher intangible asset amortization costs. Operating profit for the first nine months of 2018 includes $11.2 million2020 was the result of lower net revenues as discussed above, partially offset by reduced advertising, sales and marketing costs, as well as lower administrative expenses relateddue to the Toys“R”Us liquidation, primarily within in the United Kingdom.implementation of cost savings initiatives.
Entertainment, Licensing and Digital Segment
Entertainment, Licensing and Digital segment net revenues for the nine months ended September 29, 2019 increased 23%27, 2020 decreased 14% to $304.3$262.9 million from $246.7$304.3 million for the nine months ended September 30, 2018. Revenue growth was29, 2019. The net revenue declines during the first nine months of 2020 were primarily driven by MAGIC: THE GATHERING ARENA and the Company's share oflower film revenues in 2020 due to revenue recognized in 2019 related to the Transformers:TRANSFORMER: BUMBLEBEE Bumblebee,film combined with lower net revenues associated with the 2018 theatrical release produced jointly with Paramount Pictures.closure of the Backflip business in the fourth quarter of 2019, and to a lesser extent, lower consumer product licensing revenues during the first nine months of 2020. These declines were partially offset by an increase in digital gaming for the nine months ended September 27, 2020.
Entertainment, Licensing and Digital segment operating profit was $62.6$65.8 million, or 20.6%25.0% of net revenues, for the nine months ended September 29, 2019 down27, 2020 up from $76.0$62.6 million, or 30.8%21% of segment net revenues, for the nine months ended September 30, 2018.29, 2019. The declineincrease in operating profit in the Entertainment, Licensing and Digital segment was driven by higherlower program production expensecosts and amortization costs, reduced operating expenses associated with the closure of the Backflip business in the fourth quarter of 2019, favorable mix from growth in licensed digital gaming, as well as increased advertising, development and administration costs for MAGIC: THE GATHERING ARENA and otherlower digital gaming initiatives. These increases were partially offset by lower royalty expensesadvertising and development costs during the first nine months of 2019.2020. Partially offsetting these favorable impacts to operating profit were lower net revenues as well as asset impairment charges of $20.8 million in production assets driven by the change in entertainment strategy as a result of the eOne Acquisition during the first quarter of 2020.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
eOne Segment
During the first nine months of 2020, eOne segment net revenues were $696.9 million. The following table presents eOne segment net revenues by channel for the nine months ended September 27, 2020.
Nine Months Ended
September 27, 2020
eOne Segment Net Revenues
          Film and TV$504.1 
          Family Brands106.1 
          Music and Other86.7 
Segment Total$696.9 
The impact of the COVID-19 outbreak on the eOne segment during the first nine months of 2020 was felt most significantly during the second and third quarters of the year. Specifically, scheduled productions were and continue to be delayed or postponed due to the shutdown of live-action production work and the closure or limited reopening of studios. In addition, theatrical releases have been delayed due to the closure or limited reopening of theaters, and in some cases, global film releases were moved from theaters to alternative media platforms such as streaming services.
In the first nine months 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 and film distribution contributions from the Amblin Partners film 1917, released in December 2019; (iii) broadcast and licensing contributions from key scripted deliveries including the fifth season of FEAR THE WALKING DEAD and season two of THE ROOKIE; and(iv) 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 nine months of 2020.
eOne segment operating losses were $65.0 million, or -9.3% of segment net revenues for the first nine months of 2020. This loss was driven by $77.7 million of acquisition and integration costs, including $47.4 million of expense associated with the acceleration of eOne stock-based compensation and $24.5 million of advisor fees settled at the closing of the acquisition. Also contributing to the loss is $72.3 million of incremental intangible amortization costs related to the intangible assets acquired in the eOne Acquisition.
Global Operations
The Global Operations segment operating profit of $4.4 million for the first nine months of 2020 compares to an operating profit of $6.3 million for the first nine months of 2019 compares to an operating loss of $4.6 million for the first nine months of 2018.2019.
Corporate and Eliminations
Operating profitlosses in Corporate and Eliminations for the first nine months of 2019 was $27.62020 were $61.1 million, compared to operating lossesprofit of $30.8$27.6 million for the first nine months of 2018.2019. The Corporate and Eliminations operating loss in the first nine months of 20182020 was driven primarily by $7charges related to the eOne Acquisition; including acquisition and integration costs of $26.6 million and restructuring and related costs of expenses$40.8 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 nine monthscommercial and Film and TV businesses.

Condensed Notes to Consolidated Financial Statements
(Thousands of 2019, operating profit benefited from cost reductions associated with the implementation of the Company’s 2018 restructuring program.Dollars and Shares Except Per Share Data)




OPERATING COSTS AND EXPENSES

Third Quarter 2020     
Overall, the Company's costs and expenses in the third quarter of 2020 increased compared to the third 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 September 27, 2020 and September 29, 2019.
Quarter Ended
September 27, 2020September 29, 2019
Cost of sales34.3 %39.8 %
Program cost amortization4.8 1.8 
Royalties10.0 8.1 
Product development3.5 4.3 
Advertising7.7 8.9 
Amortization of intangibles2.0 0.8 
Selling, distribution and administration18.3 17.5 
Acquisition and related costs0.3 0.0 
Cost of sales for the third quarter of 2020 was $610.1 million, or 34.3% of net revenues, compared to $627.1 million, or 39.8% of net revenues, for the third quarter of 2019.  The decrease of cost of sales 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 percentage of net revenues was driven by the impact of $3.6 million of foreign exchange and positive brand mix driven by the increase in net sales of MAGIC: THE GATHERING combined with improved inventory costing closeout rates and lower in-freight costs in the third quarter of 2020 due to expedited shipping during the third quarter of 2019.
Program cost amortization increased to $85.4 million, or 4.8% of net revenues, for the third quarter of 2020 from $28.0 million, or 1.8% of net revenues, for the third quarter of 2019. Program costs are capitalized as incurred and amortized using the individual-film-forecast method which matches costs to the related recognized revenue. The increase in this expense both in dollars and as a percentage of net revenues is related to the addition of eOne's business, which experiences higher program cost amortization as a percentage of net sales. Program cost amortization attributable to eOne was 4.3% of net revenues for the third quarter of 2020. This increase was partially offset by lower program cost amortization in 2020 related to the BUMBLEBEE theatrical release which the Company began to amortize during the third quarter of 2019.
Royalty expense for the third quarter of 2020 increased to $176.9 million, or 10.0% of net revenues, compared to $128.0 million, or 8.1% of net revenues, for the third quarter of 2019.  The increase in royalty expense in dollars and as a percentage of net revenues was driven by the inclusion of royalty expense related to eOne operations and was 2.3% of net revenues in the third quarter. This increase was partially offset by lower sales of Partner Brand products in the third quarter of 2020 as compared to the third quarter of 2019.
Product development expense for the third quarter of 2020 was $62.7 million, or 3.5% of net revenues, compared to $67.4 million, or 4.3% of net revenues, for the third quarter of 2019. The decrease in dollars was primarily 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 MAGIC: THE GATHERING digital and tabletop gaming.
Advertising expense for the third quarter of 2020 was $137.4 million, or 7.7% of net revenues, compared to $140.3 million, or 8.9% of net revenues, for the third quarter of 2019. The advertising expense decrease in dollars and as a percent of net revenues was driven by lower advertising levels across substantially all of the Company's regions, most notably in Latin America, reflecting the current environment due to COVID-19 impacts. The savings in the third quarter, in dollars, of 2020 were partially offset by the inclusion of the eOne operations during 2020.
Amortization of intangible assets increased to $36.2 million, or 2.0% of net revenues, for the third quarter of 2020, compared to $11.8 million, or 0.8% of net revenues, for the third quarter of 2019. The increase in dollars and as a percentage of net revenues is primarily related to the acquisition of eOne, which contributed intangible asset amortization of $24.7 million, or 1.4% of net revenues, in the third quarter of 2020.
For the third quarter of 2020, the Company's selling, distribution and administration expenses increased to $325.4 million, or 18.3% of net revenues, from $275.4 million, or 17.5% of net revenues, for the third quarter of 2019. The increase in selling,

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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 higher freight expenses as a result of increased shipments. These increases were partially offset by the impact of cost savings initiatives in the third quarter of 2020 as compared to the third quarter of 2019. Selling, distribution and administration expenses attributable to eOne were 3.3% of net revenues during the third quarter of 2020.
During the three months ended September 27, 2020, the Company incurred $5.9 million of acquisition and related costs in connection with the eOne Acquisition. These expenses were comprised of $4.6 million of acquisition and integration costs, and $1.3 million of severance and retention costs.
First Nine Months of 2020
The Company's costs and expenses, stated as percentages of net revenues, are illustrated below for the quartersnine month periods ended September 29, 201927, 2020 and September 30, 2018.29, 2019.
Quarter EndedNine Months Ended
September 29, 2019 September 30, 2018September 27, 2020September 29, 2019
Cost of sales39.8% 41.8%Cost of sales30.1 %37.4 %
Program cost amortizationProgram cost amortization7.2 1.8 
Royalties8.1
 6.7
Royalties10.3 7.9 
Product development4.3
 4.2
Product development4.7 5.7 
Advertising8.9
 8.6
Advertising8.3 9.4 
Amortization of intangibles0.8
 0.6
Amortization of intangibles2.9 1.1 
Program production cost amortization1.8
 0.9
Selling, distribution and administration17.5
 17.4
Selling, distribution and administration23.7 22.7 
Acquisition and related costsAcquisition and related costs4.4 — 
Cost of sales for the third quarter of 2019 was $627.1nine months ended September 27, 2020 decreased to $1,126.0, million or 39.8%30.1% of net revenues, compared to $655.6from $1,230.8 million, or 41.8%37.4% of net revenues for the third quarternine months ended September 29, 2019. The decrease as a percentage of 2018.net revenues is primarily related to the acquisition of eOne, which experiences lower cost of sales as a percentage of net sales as well as the impact of $13.8 million of foreign exchange. The cost of sales decrease in dollars and as a percentduring the first nine months of net revenues2020 was driven by a favorablepositive brand mix from higherdue to an increase in net sales of Partner Brand products as well as savings related toMAGIC: THE GATHERING, and improved inventory costing, partially offset by higherlower sales of Partner Brand products.
Program cost amortization increased in the first nine months of 2020 to $268.2 million, or 7.2% of net revenues, from $58.1 million, or 1.8% of net revenues, in the first nine months of 2019. Programming costs are capitalized as incurred and amortized using the individual-film-forecast method which matches costs to bring inventory into the U.S.related recognized revenue. The increase in dollars, and as a percentage of net revenues, is primarily related to the addition of eOne's business, which experiences higher program cost amortization as a percentage of net sales. Program cost amortization attributable to eOne was 6.5% of net revenues during the third quarterfirst nine months of 2019 compared to 2018.2020.
Royalty expense for the third quarter of 2019nine months ended September 27, 2020 was $128.0$387.1 million, or 8.1%10.3% of net revenues, compared to $105.3$259.0 million, or 6.7%7.9% of net revenues, for the third quarter of 2018.nine months ended September 29, 2019. The increase in royalty expense in dollars, and as a percentpercentage of net revenues, was driven by higherthe inclusion of eOne operations during the first nine months of 2020 and was 3.5% of net revenues, partially offset by lower sales of Partner Brand products inproduct during the third quarterfirst nine months of 2020 as compared to the first nine months of 2019.
Product development expense for the thirdnine months ended September 27, 2020 decreased to $174.9 million, or 4.7% of net revenues, from $189.2 million, or 5.7% of net revenues, for the nine months ended September 29, 2019. The decrease as a percentage 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 nine months of 2020 was driven by lower spending as a result of global cost savings initiatives combined with the impact of the closure of the Company's Backflip business during the fourth quarter of 20192019. These decreases were partially offset by increased investments in digital gaming, primarily related to the Company's Wizards of the Coast business.
Advertising expense for the nine months ended September 27, 2020 was $67.4$311.4 million, or 4.3%8.3% of net revenues, compared to $65.8$309.7 million, or 4.2%9.4% of net revenues, for the third quarter of 2018.nine months ended September 29, 2019. The advertising expense increase in dollars was driven by increased investments inthe acquisition of eOne, partially offset by lower advertising costs related to the Company’s digital gaming.gaming initiatives and reduced advertising levels globally, reflecting the current environment due to the impact of COVID-19.

Condensed Notes to Consolidated Financial Statements
Advertising expense for the third quarter(Thousands of 2019Dollars and Shares Except Per Share Data)
Amortization of intangible assets was $140.3$107.7 million, or 8.9% of net revenues, compared to $134.4 million, or 8.6%2.9% of net revenues, for the third quarter of 2018.  The advertising expense increase was driven by net revenue increases and higher costs associated with the Company’s digital and e-sports initiatives, primarily MAGIC: THE GATHERING ARENA. 
Amortization of intangible assets was $11.8nine months ended September 27, 2020 compared to $35.4 million, or 0.8%1.1% of net revenues, forin the third quarterfirst nine months of 2019, compared to $8.8 million, or 0.6% of net revenues, for the third quarter of 2018.2019. The increase in dollars and as a percentpercentage of net revenues reflects amortizationis primarily related to the licensed property rights,acquisition of eOne, which began amortizing in 2019.
Program productioncontributed intangible asset amortization increased to $28.0of $72.3 million, or 1.8%1.9% of net revenues, forin the third quarterfirst nine months of 2019 from $14.1 million, or 0.9% of net revenues, for the third quarter of 2018. Program production costs are capitalized as incurred and amortized using the individual-film-forecast method.  The increase in dollars, and as a percent of net revenues, reflects amortization of the Transformers: Bumblebee film production asset during the third quarter of 2019.2020.
For the third quarter of 2019,nine months ended September 27, 2020, the Company's selling, distribution and administration expenses increased to $275.4$885.7 million, or 17.5%23.7% of net revenues, from $272.4$748.3 million, or 17.4%22.7% of net revenues, for the third quarter of 2018.nine months ended September 29, 2019. The increase in selling, distribution and administration expenses was driven primarily by higher shippingthe inclusion and warehousing costs inconsolidation of eOne's operations during the third quarterfirst nine months of 2019 as a result2020, combined with $11.6 million of implemented and proposed tariffs on its products in the U.S. which resulted in shifting orders from import to domestic delivery. In addition, the Company incurred higher selling and administrative costs in support ofseverance charges associated with cost-savings initiatives within the Company’s Wizards of the Coast business. These increases werecommercial and Film and TV businesses.This increase was partially offset by lower spending duemarketing, sales and warehousing expenses across the regions during the first nine months. Selling, distribution and administration expenses attributable to the Company’s cost-reduction efforts in 2019.



First Nine Months of 2019
The Company's costs and expenses, stated as percentages of net revenues, are illustrated below for the nine month periods ended September 29, 2019 and September 30, 2018.
 Nine Months Ended
 September 29, 2019 September 30, 2018
Cost of sales37.4% 39.2%
Royalties7.9
 7.6
Product development5.7
 5.7
Advertising9.4
 9.1
Amortization of intangibles1.1
 0.6
Program production cost amortization1.8
 1.0
Selling, distribution and administration22.7
 26.8
Cost of sales for the nine months ended September 29, 2019 decreased to $1,230.8 million or 37.4% of net revenues, from $1,249.1 million, or 39.2% of net revenues for the nine months ended September 30, 2018. The cost of sales decrease in dollars and as a percenteOne were 4.2% of net revenues during the first nine months of 2019 was driven by a favorable brand mix from higher sales of Partner Brand products as well as savings related to improved inventory costing, partially offset by higher costs to bring inventory into the U.S.2020.
Royalty expense for the nine months ended September 29, 2019 was $259.0 million, or 7.9% of net revenues, compared to $241.0 million, or 7.6% of net revenues, for the nine months ended September 30, 2018. The increase in royalty expense in dollars, and as a percent of net revenues, was driven by increased partner brand net revenues duringDuring the first nine months 2020, the Company incurred $166.0 million of 2019.
Product development expense foracquisition and related costs in connection with the nine months ended September 29, 2019 increased to $189.2eOne Acquisition. These expenses were comprised of $104.3 million or 5.7% of net revenues, from $183.1 million, or 5.7% of net revenues for the nine months ended September 30, 2018. The increase in dollars during the first nine months of 2019 was driven by increased investments in digital gaming,acquisition and integration costs, primarily related to MAGIC: THE GATHERING ARENA, $47.4 million of expense associated with the acceleration of eOne stock-based compensation and other digital gaming initiatives.
Advertising expense for$38.2 million of advisor fees substantially all of which were settled at the nine months ended September 29, 2019 was $309.7 million, or 9.4%closing of net revenues, compared to $290.0 million, or 9.1% of net revenues, for the nine months ended September 30, 2018. The increase in advertising expense was primarily due to higher costs related to the Company’s digital and e-sports initiatives, primarily MAGIC: THE GATHERING ARENA.
Amortization of intangibles was $35.4 million, or 1.1% of net revenues, for the nine months ended September 29, 2019 compared to $19.9 million, or 0.6% of net revenues,acquisition. Also included in the first nine monthsacquisition and related costs were $61.7 million of 2018. The increase reflects amortizationrestructuring and related to the POWER RANGERS property rights acquired during the second quartercosts including severance and retention costs of 2018$20.8 million as well as $40.9 million in impairment charges for certain definite-lived intangible and production assets. The impairment charges of $40.9 million were driven by the licensed property rights, which began amortizingchange in 2019.
Program production expense and amortization increased in the first nine months of 2019 to $58.1 million, or 1.8% of net revenues, from $33.4 million, or 1.0% of net revenues, in the first nine months of 2018. Program production costs are capitalized as incurred and amortized using the individual-film-forecast method. The increase in dollars, and as a percent of net revenues, reflects expense related to film production assets, offset by lower television programming amortization during the first nine months of 2019.
For the nine months ended September 29, 2019, the Company's selling, distribution and administration expenses decreased to $748.3 million or 22.7% of net revenues from $853.6 million or 26.8% of net revenuesstrategy for the nine months ended September 30, 2018. In the first nine months 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. The remaining decrease in selling, distribution and administration expenses was driven by cost-savings initiatives including lower compensation expense.  These decreases were partially offset by increased expenses related to opening a new Midwestern U.S. warehouse, higher shipping and warehousing costs in 2019 as a result of implemented and proposed tariffs in the U.S., which resulted in shifting orders from import to domestic delivery. In addition, the Company incurred higher selling and administrative costs in support of the Company’s Wizards of the Coast business.combined company’s entertainment assets.




NON-OPERATING (INCOME) EXPENSE
Interest expense for the third quarter and first nine months of 20192020 totaled $22.8$49.4 million and $67.1$153.7 million, respectively, compared to $22.8 million and $68.4$67.1 million in the third quarter and first nine months of 2018,2019, respectively. InterestIn 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 increase in interest expense for the third quarter and first nine months of 2019 was consistent2020 reflects interest related to these notes and other borrowings associated with 2018. The decrease in interest expense forthe eOne Acquisition, partially offset by lower average short-term borrowings during the first nine months of 2019 primarily reflects lower levels of short-term borrowing in 2019 compared to 2018.2020.
Interest income was $5.5$0.7 million and $19.2$6.4 million for the third quarter and first nine months of 2019,2020, respectively, compared to $4.7$5.5 million and $17.2$19.2 million in the third quarter and first nine months of 2018,2019, respectively. HigherLower average interest rates in 20192020 compared to 20182019 contributed to the nine month increase offset by lower levels of invested cash in 2019.decrease.
Other expense,income, net was $20.2$11.3 million and $118.3$15.4 million for the third quarter and first nine months of 2019,2020, respectively, compared to other income,expense, net of $0.6$20.2 million and $6.2$118.3 million in the third quarter and first nine months of 2018,2019, respectively. Included within other expense, net in the first nine months of 2019 was a $110.8 million non-cash pension charge from the settlement of the Company's U.S. defined benefit pension plan liability during the second quarter of 2019. Included within other expense, net inThe increase for the third quarter ofwas driven by lower foreign currency losses in 2020 compared to 2019, waswhich included a $25.5 million charge related to unrealized losses on foreign exchange forward and option contracts entered into by the Company to limit exposure to foreign currency fluctuations associated with the proposed eOne acquisitionAcquisition price.Also contributing to the third quarter 2020 increase is a $6.1 million gain related to the sale of the Dragonvale software and brand.The increase for the nine month period 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 combined with the previously discussed lower foreign currency losses in 2020 and gain on the sale of the Dragonvale software and brand.
INCOME TAXES
On December 22, 2017, the U.S. government enacted comprehensiveIncome 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 taxexpense totaled $79.2 million on certain unrepatriatedpre-tax 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$299.2 million 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. In the third quarter of 2018, the estimate was further revised based on additional guidance and a one-time tax benefit of $17.3 was recorded. 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 relating2020 compared to the Tax Act.
Incomeincome tax expense totaledof $46.8 million on pre-tax earnings of $259.7 million in the third quarter of 20192019.For the nine-month period, income tax expense totaled $64.3 million on pre-tax earnings of $183.6 million in 2020 compared to income tax expense of $31.9 million on pre-tax earnings of $295.8 million in the third quarter of 2018. For the nine month period, income tax expense totaled $42.3 million on pre-tax earnings of $295.4 million in 2019. The quarter and nine month periods in both 2020 and 2019, compared to income tax expense of $63.9 million on pre-tax earnings of $275.5 million in 2018.  Both periodsas well as the full year 2019, were impacted by discrete tax events including the accrual of potential interest and penalties on uncertain tax positions. During the first nine months of 2019,2020, favorable discrete tax adjustments were a net benefit of $31.7$5.3 million compared to a net expensebenefit of $10.6$31.7 million in the first nine months of 2018. 2019. The favorable discrete tax adjustments for the first nine months of 2020 primarily relate to the costs related to the acquisition of eOne offset by the revaluation of UK tax attributes as a result of the United Kingdom’s enactment during the quarter ofthe Finance Act of 2020 which maintains the corporate income tax rate at 19% and an increase of uncertain tax positions based on changes in management judgement.The favorable discrete tax adjustments for the first nine months of 2019 primarily relaterelated to the settlement of the U.S. defined benefit 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 nine months

Condensed Notes to Consolidated Financial Statements
(Thousands of 2018 primarily related to changes in guidance on U.S. tax reform, which resulted in the reversal of a tax benefit recorded in 2017Dollars and additional repatriation tax liability, partially offset by excess tax benefits on share-based payments and audit settlements.Shares Except Per Share Data)
positions. Absent discrete items, the adjusted tax rates for the first nine months of 2020 and 2019 were 19.9% and 2018 were 18.2% and 17.6%, respectively. The increase in the adjusted tax rate of 18.2%19.9% for the first nine months ended September 29, 2019of 2020 is primarily due to the mix of jurisdictions where the Company earned its profits.profits and the impact of the eOne Acquisition.

The UK enacted the Finance Act of 2020 upon receiving royal assent on July 22, 2020.Effective 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 Finance Act of 2016. Changes in tax laws and rates impact recorded deferred tax assets and liabilities and our effective tax rate.The primary impact resulted from the revaluation of Hasbro’s UK tax attributes, which resulted in an increased tax provision of $13.7 million in the third quarter of 2020.
OTHER INFORMATION
Brexit Referendum
On June 23, 2016, the 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 was significant during the first nine months of 2020. 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 continuing into the second quarter, these locations were operating at varying levels of productivity depending on local government and safety considerations however, as of the end of the third quarter, the majority of the Company's third-party manufacturing facilities were up and running. The COVID-19 situation continues to be fluid, but we currently expect all manufacturing facilities to remain operational through the end of 2020, unless a resurgence of COVID-19 cases were to cause further manufacturing shutdowns or restrictions. Additionally, the Company experienced significant growth in its ecommerce business during 2020, as more consumers have turned to online shopping as a result of the COVID-19 outbreak, which provides the Company with less lead-time to ship product as compared to product being shipped to brick and mortar retailers. We believe we are currently well positioned to meet our expected shipping schedule demands 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 near term.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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 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, 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 consolidated statement of stockholders’ equity for the quarters and year-to-date periods ending September 29, 2019 and September 30, 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 nine 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.
In August 2019, the Company entered into a definitive agreement under which Hasbro will acquire all
Condensed Notes to Consolidated Financial Statements
(Thousands of the outstanding shares of stock of eOne in an all cash transaction valued at approximately £3.3 billion or $4 billion based on exchange rates on the agreement date. Under the terms of the agreement, eOne shareholders will receive £5.60 in cash for each common share of eOne. Dollars and Shares Except Per Share Data)
The Company expects to financecontinue to fund its working capital needs primarily through available cash and cash flows from operations as well as production financing facilities and, when needed, by issuing commercial paper or borrowing under its revolving credit agreement. In the transaction withevent that the proceeds from debtCompany is not able to issue commercial paper, the Company intends to utilize its available lines of credit. With the acquisition of eOne, the Company funds certain of its television and equity financing. The Company has entered into a debt commitment letter with BofA to provide a 364-day senior unsecured bridge loan facility in an aggregate principal amount of up to £3.6 billion to secure fundingfilm productions using production financing facilities which are secured by the assets and future revenues of the purchase price (the "Bridge Facility"). Costs associated withindividual production subsidiaries. Under these facilities, the Bridge Facility incash generated by the amount of approximately $19 million are being capitalized and are included in prepaid expenses and other current assets inproduction may be restricted until the Company’s consolidated balance sheets. In addition, subsequent to the agreement described above, the Company entered into the Term Loan Agreement with BofA as administrative agent and certain financial institutions, as lenders, pursuant to which such lenders committed to provide, contingent upon completion of the acquisition and certain other customary conditions of funding, the Term Loan Facilities in an aggregate principal amount of up to $1,000.0 million. Borrowings under the Term Loan Facilities will be used to pay a portion of the consideration and other amounts payable in connection with the Company’s acquisition of eOne.
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 September 29, 2019,27, 2020, the Company's cash and cash equivalents totaled $1,060.4 million.$1,132.4 million, of which $71.2 million is restricted under the Company’s production financing facilities. Prior to 2017, deferred income taxes had not been provided on the majority of undistributed earnings of international subsidiaries as such earnings were considered indefinitely reinvested by the Company. The Tax Cuts and Jobs Act (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 September 29, 2019,27, 2020, the Company has a total liability of $192.9$174.5 million related to this tax, $18.4 million is reflected in current liabilities while the remaining long-term payable related to the Tax Act of $174.5$156.1 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 September 29, 201927, 2020 is denominated in the U.S. dollar.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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.
September 27, 2020September 29, 2019% Change
September 29, 2019 September 30, 2018 
%
Change
Cash and cash equivalents$1,060.4
 907.1
 17 %
Cash and cash equivalents (including restricted cash of $71.2 and $0)Cash and cash equivalents (including restricted cash of $71.2 and $0)$1,132.4 1,060.4 7 %
Accounts receivable, net1,416.9
 1,391.2
 2 %Accounts receivable, net1,438.4 1,416.9 2 %
Inventories589.1
 610.9
 -4 %Inventories540.0 589.1 -8 %
Prepaid expenses and other current assets346.7
 283.2
 22 %Prepaid expenses and other current assets648.2 346.7 87 %
Other assets626.2
 743.1
 -16 %Other assets1,276.1 626.2 104 %
Accounts payable and accrued liabilities1,458.8
 1,301.6
 12 %Accounts payable and accrued liabilities1,936.2 1,458.8 33 %
Other liabilities550.8
 591.4
 -7 %Other liabilities778.5 550.8 41 %
Accounts receivable increased 2%to $1,438.4 million at September 27, 2020, compared to $1,416.9 million at September 29, 2019, compared to $1,391.2 million at September 30, 2018.2019. Absent the $28.7 millionunfavorable foreign currency impact of foreign currency translation,$21.5 million, accounts receivable increased approximately 4%.  Accounts3%, or $43.1 million. The increase in accounts receivable net atduring the first nine months of 2020 was driven primarily by the inclusion of eOne balances of $177.9 million. Absent eOne, accounts receivable balances decreased across the Company's Latin American, U.S. and Canada and European regions due to improved collections during the nine months ended September 30, 2018 included a $77.0 million allowance for doubtful accounts related27, 2020 compared to Toys“R”Us.the same period in 2019. Days sales outstanding increased todecreased from 82 days at September 29, 2019 from 81to 74 days at September 30, 2018.27, 2020 primarily due to the mix of sales, improved collections and higher shipments earlier in the quarter.
Inventories decreased 4%to $540.0 million as of September 27, 2020 compared to $589.1 million at September 29, 2019 from $610.9 million at September 30, 2018.2019. Absent the $15.1 millionunfavorable foreign currency impact of foreign currency translation,$8.2 million, inventories would have decreased 1%. The decrease at September 29, 2019 reflects7% reflecting lower levels in the U.S. and Canada and Asia Pacific markets primarily due to improved inventory management, initiatives implemented across the Company's international markets offset by higher inventories in Latin America due to higher than normal inventory levels heldremaining from the fourth quarter of 2019 and lower sales and lower shipments in the U.S as a resultfirst nine months of 2020 due to the proposed U.S. tariffs.impact of COVID-19.
Prepaid expenses and other current assets increased 22% to $648.2 million at September 27, 2020 from $346.7 million at September 29, 2019 from $283.2 million at September 30, 2018.2019. The increase was due to higher unrealized gains on foreign exchange contracts,accrued royalty and licensing income, primarily attributable to accrued revenue balances of $228.6 million associated with eOne's properties and content, higher accrued tax credits related to film and television production costs, the majority of which are attributable to eOne productions, higher prepaid royalty balances as well as approximately $19 millionamounts due to payments made in the first quarter of deferred financing costs recorded to current assets in relation to the Bridge Facility, used to secure funding2020 for the proposed purchaseextension of eOne. At September 29, 2019, there are no borrowings under these facilities. In addition,the Company’s Marvel and Lucas agreements and higher prepaid tax balances as a result of the settlement of the Company's U.S. defined benefit pension plan liability, the Company had excess assets of approximately $19 million of which $8 million is recorded as a current asset and will be usedlower earnings relative to fund future Company contributions to the Company's 401(k) plan in the U.S.estimated tax payments. These increases were partially offset by lower prepaid advertisingunrealized gains on foreign exchange contracts, deferred financing cost balances as a resultrecorded at September 29, 2019 to secure funding for the purchase of the timing of payments in 2019eOne and lower short-term investment balances at September 27, 2020 compared to 2018 and lower value-added taxes.September 29, 2019.
Other assets decreasedincreased to approximately 16% to$1,276.1 million at September 27, 2020 from $626.2 million at September 29, 2019 from $743.1 million at September 30, 2018.2019. The decreaseincrease was primarily due to lowereOne's investments in acquired content and production for music, film and television content of $619.5 million. Also contributing to the increase are higher long-term accrued income balances primarily driven by eOne and higher deferred tax asset balances as a result of a reclassification of certain deferred tax assets to reduce the Company's transition tax liability, lower long-term receivable balances related to third-party production studio rebates, lower capitalized movie production costs as a result of amortization of certain production assets during the fourth quarter of 2018 and the first nine months of 2019.balances. These decreasesincreases were partially offset by the above mentioned pension surplus as a result of the settlement of the Company's U.S. defined benefit pension plan liability of which approximately $12 million is recorded in other assets, higherlower capitalized television production costs net of production rebates and higher long-term accrued royalty income balances in 2019.the legacy Hasbro business.
Accounts payable and accrued liabilities increased 12% to $1,936.2 million at September 27, 2020 from $1,458.8 million at September 29, 2019 from $1,301.6 million at September 30, 2018. Increases include2019. The increase was primarily attributable to eOne accrued participation and deferred revenue balances. In addition, increases included higher accrued advertising primarily related to MAGIC: THE GATHERING ARENA, deferred option premiumsroyalty balances as well as higher accrued interest as a result of approximately $34 million, recorded to accrued liabilities, to hedge a portionhigher debt levels in 2020 from the issuance of the Company's exposure to fluctuationsnotes in the British pound sterlingNovember 2019 and January 2020. These increases were partially offset by lower accounts payable balances and lower severance accruals as payments made in relation to the acquisition of eOne, higher severance accrual related toCompany’s 2018 restructuring actions more than offset the increase from the restructuring actions taken in the fourthsecond quarter of 2018, the Company’s current lease liability balance of $29.3 million included in accrued liabilities as the result of the adoption of ASU 2016-02 and higher accrued royalty balances2020 as a result of higher salesthe integration of Partner Brands products during the third quartereOne.

Condensed Notes to Consolidated Financial Statements
(Thousands of 2019. These increases were partially offset by the payment of remaining amounts due to Saban Properties for the Power Rangers brand acquisitionDollars and lower accrued value added tax balances in the first nine months of 2019.Shares Except Per Share Data)
Other liabilities decreased 7%increased to $778.5 million at September 27, 2020 from $550.8 million at September 29, 2019 from $591.4 million at September 30, 2018.2019. The decrease includes a decrease in the transition tax liability reflecting the reclassification of certainincrease was primarily driven by deferred tax assets to reduce the transition tax liability as well as the 2019 installment payment, a decrease in the liability for uncertain tax positions and lower long-term pension balancesliabilities recorded as a result of the settlement of the Company's U.S. defined benefit pension plan liability in 2019. These decreases were partially offset by the adoption of ASU 2016-02 in 2019 which requires the recognition ofeOne Acquisition, higher long-term lease liability balances whichresulting from the eOne Acquisition and higher reserves for uncertain tax positions. In addition, the balance at September 27, 2020 includes long-term deferred revenue balances of eOne and higher long-term international pension balances due to 2019 year-end actuarial valuations. These increases were $115.0 million asoffset by a lower transition tax liability balance reflecting the reclassification of the 2021 installment payment.
Cash Flow
The following table summarizes the changes in the Consolidated Statement of Cash Flows, expressed in millions of dollars, for the quarters ended September 27, 2020 and September 29, 2019.



Cash Flow
September 27, 2020September 29, 2019
Net cash provided by (used in)
Operating activities$494.3 $389.6 
Investing activities(4,471.7)(86.5)
Financing activities550.5 (417.2)
Net cash provided by operating activities in the first nine months of 20192020 was $389.6$494.3 million compared to $174.7$389.6 million in the first nine months of 2018.2019. The $104.7 million increase in net cash flow from operationsprovided by operating activities was primarily reflectsattributable to higher collections of accounts receivable balances during the first nine months of 2020 and higher earnings adjusted forexcluding non-cash items,charges. These increases were partially offset by higher film and television production spend as a result of the inclusion of eOne operations during the first nine months of 2020 as well as royalty advances paid in the first quarter of 2020 related to the extension of the Company’s Marvel and Lucas license agreements that were due to expire in 2020.
Net cash utilized in investing activities was $4,471.7 million in the first nine months of 2019 as2020 compared to the first nine months of 2018. To a lesser extent the increase in operating cash flows resulted from lower film production costs in 2019 as well as lower inventory purchases in 2019.
Net cash utilized by investing activities was $86.5 million in the first nine months of 2019.  The increase in 2020 reflects $4.4 billion of cash utilized to acquire 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 in November 2019, comparednet proceeds $975.2 million from of the issuance of approximately 10.6 million shares of common stock in November 2019 and $1.0 billion in term loans drawn in the first quarter of 2020.
Additions to $250.9property, plant and equipment were $92.1 million in the first nine months of 2018.  Additions2020 compared to property, plant and equipment were $90.8 million in the first nine months of 2019 compared to $104.02019.
Net cash provided by financing activities was $550.5 million in the first nine 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 $417.2 million in the first nine months of 2019 compared to $578.6 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 nine months of 2018. The decline in cash utilized in financing activities was driven by:
Decline in2020, the Company had drawdowns of $38.9 million and repayments of short-term borrowings of $130.2$124.8 million in the first nine months of 2019, compared to 2018, due to lower short-term borrowings in 2019.
Lower cash payments related to purchaseseOne production financing loans and paid $47.4 million associated with the redemption of eOne stock awards that were accelerated as a result of the Company's common stock which were $60.1acquisition. In addition, the Company made quarterly principal payments totaling $22.5 million related to the $1.0 billion in the first nine months of 2019 compared to $187.9 million in the first nine months of 2018.
Lower tax payments made to tax authorities for which shares were withheld from employees’ share-based payment awards, which were $13.1 million in the first nine months of 2019, compared to $58.3 million in 2018.
Partially offset by:
Higher dividends paid in the first nine months of 2019 of $250.8 million compared to $229.6 million in the first nine months of 2018 reflecting a higher dividend rate commencing with the May 2019 dividend payments.term loans described above.
During the first nine months of 2019, the Company paid $100.0 million to Saban Properties related to the 2018 Power Rangers brandPOWER 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.
Debt acquisition costspurchases of $21.5the Company’s common stock were $60.1 million in the first nine months of 2019. There were no repurchases of the Company’s common stock in the first nine months of 2020 as the Company suspended the program while it prioritizes deleveraging. Dividends paid in the first nine months of 2020 totaled $279.4 million compared to $250.8 million in the first nine months of 2019 primarily related toreflecting the Bridge Facility andadditional shares issued in the Term Loan Agreement.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

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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 September 29, 2019,27, 2020, the Company had no outstanding borrowings related to the Program.




During the third quarter of 2019, theThe Company entered intohas a second amended and restated revolving credit agreement with BofA,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 "Revolving"Amended Revolving Credit Agreement"), which provides the Company with commitments having a maximum aggregate principal amount of $1,500.0 million. The Amended Revolving Credit Agreement also provides for a potential additional incremental commitment increase of up to $500.0 million comprised of (1) $1,100.0 million of commitments effective as of September 20, 2019, and (2) $400.0 million of commitments that may become effective upon completionsubject to agreement of the acquisition of eOne.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 subject to agreement of the lenders. Prior to theextends through September 2019 amendment, the Revolving Credit Agreement provided for a $1,100.0 million revolving credit facility.20, 2024.  The Company was in compliance with all covenants as of and for the quarter ended September 29, 2019.27, 2020. The Company had no borrowings outstanding under its committed revolving credit facility as of September 29, 2019.27, 2020. However, the Company had letters of credit outstanding under this facility as of September 29, 2019 of27, 2020 were approximately $2.7 million. Amounts available and unused under the committed line, as ofat September 29, 201927, 2020 were approximately $1,497.3 million.million, inclusive of borrowings under the Company’s commercial paper program. The Company also has other uncommitted lines from various banks, of which approximately $22.4$23.2 million was utilized as ofat September 29, 2019, including $14.527, 2020. Of the amount utilized under, or supported by, the uncommitted lines, approximately $10.0 million ofand $13.2 million represent outstanding short-term borrowings and letters of credit, and $7.9 million of outstanding borrowings.

respectively.
As noted above, on
In September 20,of 2019, the Company entered into a $1.0 billion Term Loan Agreement providing for(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 Term Loan Facilitythree-year senior unsecured term loan facility in an aggregate principal amount of up to $1,000.0 million.$400.0 million (the “Three-Year Tranche”) and (2) a five-year senior unsecured term loan facility in an aggregate principal amount of $600.0 million (the “Five-Year Tranche” and together with the Three-Year Tranche, the “Term Loan Facilities”). On December 30, 2019, the Company completed the acquisition of eOne and on that date, borrowed the full amount of $1.0 billion under the Term Loan Facilities. Loans under the Term Loan Facilities will bear interest, at the Company’s option, at either the Eurocurrency Rate (determined in accordance with the Term Loan Agreement) or the Base Rate, (determined in accordance with the Term Loan Agreement), 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 InvestorsInvestor Service, Inc. and S&P Global Ratings,Rankings, subject to certain provisions taking into account potential differences in ratings issued byto the relevant ratingsrating agencies or a lack of ratings issued by such ratings agencies. There wereLoans 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 borrowings underless 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 Agreement as of September 29, 2019. Borrowings under these Term Loan Facilities, will be usedwith periodic step downs to pay a portion of3.50:1.00 for the consideration in connection with the Company's acquisition of eOne. The Agreement contains certain financial covenants setting forth leveragefiscal quarter ending December 31, 2023 and coverage requirements, and certain other limitations typical of an investment grade facility, including with respect to liens, mergers and incurrence of indebtedness.thereafter.
The Company has principal amounts of long-term debt at September 29, 201927, 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, $369.3 million is current at September 27, 2020 of which $300.0 million is related to the 3.15% 2021 Notes and $30.0 million is related to principal amortization of the 5-year term loans due December 2024. Additionally, the Company has outstanding production financing facilities at September 27, 2020 of $121.4 million of which $82.2 million is included in long-term debt and $39.2 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.

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
The Company also had letters of credit and other similar instruments of approximately $17.2$15.9 million and purchase commitments of approximately $763.8$605.9 million outstanding at September 29, 2019.27, 2020.
During 2019,Through the eOne Acquisition, the Company amended its manufacturing agreement with Cartamundi NV (“Cartamundi”). The amended agreement extends the term of the agreement from 2020 to 2023assumed eOne's existing future obligations for film and increases thetelevision content, future minimum contractual purchase commitmentsroyalty payment obligations and operating lease commitments. Future payments required under the agreement to the following amounts: 2019: $130.0 million; 2020: $120.0 million; 2021: $105.0 million; 2022: $95.0 million; and 2023: $85.0 million.these obligations, expressed in millions of dollars as of September 27, 2020, are as follows:
Remainder 20202021202220232024ThereafterTotal
Future film and television obligations$24.7 52.4 1.9 — — — $79.0 
First-look commitments6.3 20.7 8.4 — — — 35.4 
Operating lease commitments23.6 36.0 11.2 10.1 8.8 22.8 112.5 
$54.6 109.1 21.5 10.1 8.8 22.8 $226.9 
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.

Condensed Notes to Consolidated Financial Statements

(Thousands of Dollars and Shares Except Per Share Data)

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 and zero-cost collar options.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 its proposed acquisitionthe eOne Acquisition purchase price and other transaction related costs using a series of eOne using 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 first nine months 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 September 29, 2019,27, 2020, these contracts had net unrealized gains of $42.5$15.3 million, of which $43.6$11.7 million of unrealized gains are recorded in prepaid expenses and other current assets, $10.4$4.0 million of unrealized gains are recorded in other assets, and $11.5$0.3 million of unrealized losses are recorded in accrued liabilities and $0.1 million of unrealized losses are recorded in other liabilities. Included in accumulated other comprehensive loss at September 29, 201927, 2020 are deferred gains, net of tax, of $23.7$11.5 million, related to these derivatives.
At September 29, 2019,27, 2020, the Company had principal amounts of 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 September 29, 201927, 2020 are deferred losses, net of tax, of $18.3$16.9 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

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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 September 29, 2019.27, 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.
ThereChanges 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 September 29, 201927, 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.

Condensed Notes to Consolidated Financial Statements

(Thousands of Dollars and Shares Except Per Share Data)

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 alleged 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. On October 18, 2019, the lead plaintiff in this matter voluntarily dismissed the action without prejudice against the Defendants.
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.Risk Factors.
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.
Risks Related to Business Operations
The global coronavirus outbreak or other similar outbreaks of communicable infections, diseases, or public health pandemics in the markets in which we and our employees, consumers, customers, partners, licensees, suppliers and manufacturers operate, could substantially harm our business.
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:
This Quarterly Report•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 of 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, bankruptcies of retailers, 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 gradually reopening, but on a limited basis and may and continue to be adversely affected by the coronavirus. Specifically, scheduled live-action productions have been delayed or postponed in 2020 due to the shutdown of production work and the closure or limited reopening of studios,

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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 the impact to our entertainment business's results due to the shutdown of productions 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 be reluctant or unable 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 continuing to experience difficulties in certain countries in Latin America, which have continued to be adversely affected by the number of coronavirus cases and do not have robust e-commerce businesses.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 $1.1 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 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; anticipated uses of cash; and expectations relating to the Company’s proposed acquisition of eOne. 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; the ability to achieve our financial and business goals and objectives; the expected adequacy of supply and operation of our manufacturing facilities; 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 variationsresults may differ materially from those expected

Condensed Notes to Consolidated Financial Statements
(Thousands of words with similar meanings. TheseDollars and Shares Except Per Share Data)
or anticipated in the forward-looking statements are inherently subjectdue to both 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. Factors which may impact these forward-looking statements are included in our Annual Report. In furtherance, and not in limitation, of the more detailed discussion set forth in the Annual Report, specific 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 majorityexecute plans to mitigate the negative impact of the Company’s total revenues;coronavirus to our business;
the Company's•our 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, marketmanufacture, source and sell innovative new brands,ship products product lines and entertainment offerings inon a timely, cost-effective and cost-effective manner, which achieve and sustain interest from retailers and consumers and keep pace with changesprofitable basis;
•rapidly changing consumer interests 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;
concentration of manufacturing of the substantial majority of the Company's products by third party vendors in the People'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;



the ability of the Company to successfully diversify sourcing of its products to reduce reliance on sources of supply in China, including challenges associated with identifying and onboarding new vendors who may not be as experienced as our historical vendors in producing the types of products manufactured for us and entertainment we offer;
•the challenge of developing and offering products and storytelling 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 brands, studios, content producers and entertainment distribution channels;
•our ability to successfully compete in meeting the qualityglobal play and compliance needsentertainment industry, including with manufacturers, marketers, and sellers of ourtoys and games, digital gaming products potentially exposing us to delayed supply, increased costs or product non-compliance,and digital media, as well as with film studios, television production companies and independent distributors and content producers;
•our ability to successfully evolve and transform our business and capabilities to address a changing global consumer landscape and retail environment, including 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 sourcing products from countries whereinternational operations, such as currency conversion, currency fluctuations, the infrastructure is not as developed as it is in eastern China;
the applicationimposition of tariffs, quotas, border adjustment taxes or other protectionist measures, and other trade restrictions impacting the cost of producing our products and importing them into markets around the world for sale, which could significantly increase the price of the Company’s products and substantially harm sales, including, without limitation, through the elimination of direct import orders where our customers take ownership of products at ports near the source of supply, and the shift to domestic orders, which require us to ship the products to the market, import them and warehouse them, thus raising costs to us, delaying the time of sale, and resultingchallenges in the potential loss of some orders entirely due to lack of timely supply or other matters;territories in which we operate;
the•our ability of the Company to successfully implement actions to lessen the impact of potential and enacted tariffs imposed on our products, including any changes to our supply chain, logistics capabilities,inventory management, sales policies or pricing of our products;
the success of the Company’s key partner brands,•downturns in global and the Company’s ability to maintain, renew 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 to source and ship products in a timely and cost-effective manner and customers' and consumers' acceptance and purchase of those products in quantities and at prices that will be sufficient to profitably recover the Company's costs for developing, marketing and selling those products;
the Company’s ability to successfully evolve and transform its business to address a changing global consumer landscape and retail environment, one in which online shopping 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 the changes to its business that are required to be successful under these changing marketplace conditions;
recessions, other economic downturns, challengingregional 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 revenuesmanufacturing for many of our products in the second halfPeople’s Republic of China and our ability to successfully diversify sourcing of our products to reduce reliance on sources of supply in China;
•our ability to attract and retain talented employees;
•our ability to realize the year,benefits of cost-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 acts compromising the integrity of our assets or intellectual property;
•risks relating to the impairment and/or write-offs of products and films and television programs we acquire and produce;
•risks relating to investments and acquisitions, such as our acquisition of eOne, which coupled with reliance by retailers on quick response inventoryrisks include: integration difficulties; inability to retain key personnel; diversion of management techniques, increases the risk of underproduction of popular items, overproduction of less popular itemstime and resources; failure to achieve compressed shipping schedules;
the impactanticipated benefits or synergies of retail inventory overhang in oneacquisitions or more of our key markets, which can reduce purchases of our products from our customersinvestments; and lower our revenues and profitability;
our ability to evolve our business quickly and efficiently to respondrisks relating to the challenges of today’s converged retail environment;additional indebtedness incurred in connection with a transaction;
work stoppages or disruptions which may impact the Company's ability to manufacture or deliver products in a timely and cost-effective manner;
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 risk that anticipated benefits of acquisitions or investments may not occur, or may be delayed or reduced in their realization; specifically, in the case of our proposed acquisition of Entertainment One, the Company faces risks and uncertainties as to whether the transaction will be completed in a timely manner or at all; uncertainty as to whether the conditions precedent to completion of the transaction, including applicable regulatory approvals, will be satisfied in a timely manner, on expected terms or at all; uncertainty as to whether the Company will achieve the expected benefits and synergies from the transaction within the anticipated time frame or at all; risks of unexpected costs, liabilities or delays; integration difficulties, including the ability to retain key personnel and to effectively manage a significantly expanded business following the completion of the transaction; risks relating to the Company’s ability to complete financings on satisfactory terms or at all; risks relating to the additional indebtedness that Hasbro may incur in connection with the transaction; risks related to fluctuations in foreign exchange rates, particularly given that the purchase price for the proposed acquisition is denominated in pounds sterling; other unexpected factors that may impact or alter Hasbro’s anticipated business plans, strategies and objectives if the transaction is completed; and the effect of the announcement, pendency or consummation of the transaction on customers, employees, suppliers, partners and operating results, including the diversion of our management’s time and resources;
the ability of the Company to hire and retain key officers and employees who are critical to the Company's success;
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 Companyalter tax reserves or make other changes which would significantly impact our reported financial results;

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and which may also harm the reputation of the Company and its products, potentially harming future product sales;Shares Except Per Share Data)



•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 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 regulations, increased costs and/or economic uncertainty associated with the U.K. vote to leave the European Union (“EU”), commonly referred to as Brexit, which may make it more difficult and/or costly for us to supply products to the UK or other parts of the EU, harm our sales and lower 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 nine months 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
July 2020
6/29/20 – 7/26/20— $— — $366,592,558 
August 2020
7/27/20 – 8/30/20— $— — $366,592,558 
September 2020
8/31/20 – 9/27/20— $— — $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
July 2019       
7/1/19 – 7/28/199,500
 $104.85
 9,500
 $368,350,052
August 2019       
7/29/19 – 9/1/194,845
 $104.76
 4,845
 $367,842,467
September 2019       
9/2/19 – 9/29/19—
 $—
 —
 $367,842,467
Total14,345
 $104.82
 14,345
 $367,842,467
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 there is no expiration date. The timing, actual number, and value of 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. As a result of the Company's equity financing plan related to its proposed acquisition of eOne, the Company plans to suspend its share repurchase program for the time being. See Footnote 1, “Basis of Presentation,” to the Consolidated Financial Statements for further discussion.
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.


Condensed Notes to Consolidated Financial Statements

(Thousands of Dollars and Shares Except Per Share Data)

Item 6.    Exhibits
Item 6.Exhibits


2.1
Arrangement Agreement by and among Hasbro, Inc., 11573390 Canada Inc. and eOne, dated as of August 22, 2019.  (Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on August 23, 2019, File No. 1-6682).
3.1 
2.2
3.1
Restated Articles of Incorporation of the Company. (Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the period ended July 2, 2000, File No. 1-6682.)
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
10.14.8 
10.2
10.1*

Condensed Notes to Consolidated Financial Statements
(Thousands of Dollars and Shares Except Per Share Data)
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

Condensed Notes to Consolidated Financial Statements

(Thousands of Dollars and Shares Except Per Share Data)

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.
HASBRO, INC.(Registrant)
(Registrant)
Date: October 22, 2019November 4, 2020By:  /s/ Deborah Thomas
Deborah Thomas
Executive Vice President and

Chief Financial Officer

(Duly Authorized Officer and

Principal Financial Officer)