(State of Incorporation) | (I.R.S. Employer Identification No.) | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
☒ | Accelerated Filer | ☐ | Non-Accelerated Filer | ☐ | Smaller Reporting Company | ||
Emerging Growth Company |
Page | ||
Item 1. | Business. |
• | expanding our brand portfolio with eOne’s beloved global preschool brands, including PEPPA PIG, PJ MASKS and RICKY ZOOM; |
• | adding proven TV and film expertise and executive leadership; |
• | enhancing brand building capabilities, our storytelling capabilities and franchise economics in TV, film and other mediums to strengthen Hasbro brands; and |
• | creating additional opportunities for long-term profitable growth through in-sourcing and cost-synergies, as well as future revenue growth opportunities. |
• | In October 2017, Allspark Pictures released MY LITTLE PONY: THE MOVIE. |
• | In December 2018, Hasbro and Paramount released BUMBLEBEE, a film centered on the TRANSFORMERS character. |
Name | Age | Position and Office Held | Period Serving in Current Position |
Brian D. Goldner(1) | 56 | Chairman of the Board and Chief Executive Officer | Since 2017 |
John A. Frascotti(2) | 59 | President and Chief Operating Officer | Since 2018 |
Darren Throop(3) | 55 | Chief Executive Officer, Entertainment One | Since 2020 |
Deborah M. Thomas(4) | 56 | Executive Vice President and Chief Financial Officer | Since 2013 |
Tom Courtney(5) | 59 | Executive Vice President, Chief Global Operations Officer | Since 2017 |
Michael Hogg(6) | 65 | Executive Vice President and Chief Commercial Officer | Since 2020 |
Dolph Johnson | 61 | Executive Vice President and Chief Human Resources Officer | Since 2012 |
Tarrant Sibley(7) | 51 | Executive Vice President, Chief Legal Officer and Secretary | Since 2019 |
(1) Prior thereto, Chairman of the Board, President and Chief Executive Officer from 2015 to 2017; prior thereto, President and Chief Executive Officer from 2008 to 2015. | |
(2) Prior thereto, President from 2017 to 2018; President Hasbro Brands from 2014 to 2017; Executive Vice President and Chief Marketing Officer from 2013 to 2014; and Senior Vice President and Global Chief Marketing Officer from 2008 to 2013. | |
(3) Mr. Throop was appointed an executive officer of Hasbro in February 2020. He has served as Chief Executive Officer of eOne since 2003. | |
(4) Prior thereto, Senior Vice President and Chief Financial Officer from 2009 to 2013. | |
(5) Prior thereto, Senior Vice President and General Manager, Global Operations, from 2012 to 2017. | |
(6) Prior thereto, Chief Operating Officer, Commercial Markets from 2018 to 2019; prior thereto, President, Hasbro North America from 2011 to 2018. | |
(7) Prior thereto, Senior Vice President, Chief Legal Officer and Secretary from 2018 to 2019 and Senior Vice President and Deputy General Counsel from 2010 to 2018. |
Item 1A. | Risk Factors. |
• | any of our brands, products or product lines will achieve popularity or continue to be popular; |
• | any property for which we have a significant license will achieve or sustain popularity; |
• | any new products or product lines we introduce will be considered interesting to consumers and achieve an adequate market acceptance; or |
• | any product’s life cycle or sales quantities will be sufficient to permit us to profitably recover our development, manufacturing, marketing, royalties (including royalty advances and guarantees) and other costs of producing, marketing and selling the product. |
• | Currency conversion risks and currency fluctuations; |
• | The imposition of tariffs, quotas, border adjustment taxes or other protectionist measures; |
• | Potential challenges to our transfer pricing determinations and other aspects of our cross border transactions, which can materially increase our taxes and other costs of doing business; |
• | Political instability, civil unrest and economic instability; |
• | Greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; |
• | Complications in complying with different laws in varying jurisdictions and in dealing with changes in governmental policies and the evolution of laws and regulations and related enforcement; |
• | Difficulties understanding the retail climate, consumer trends, local customs and competitive conditions in foreign markets which may be quite different from the U.S.; |
• | Natural disasters and the greater difficulty and cost in recovering therefrom; |
• | Transportation delays and interruptions; |
• | Difficulties in moving materials and products from one country to another, including port congestion, strikes and other transportation delays and interruptions; |
• | Increased investment and operational complexity to make our products compatible with systems in various countries and compliant with local laws; and |
• | Changes in international labor costs and other costs of doing business internationally. |
• | make it more difficult and/or costly for us to pay or refinance our debts as they become due, particularly during adverse economic and industry conditions, because a decrease in revenues or increase in costs could cause cash flow from operations to be insufficient to make scheduled debt service payments; |
• | require a substantial portion of our available cash to be used for debt service payments, thereby reducing the availability of our cash to fund working capital, capital expenditures, development projects, acquisitions or other strategic opportunities, dividend payments, share repurchases and other general corporate purposes, which could harm our prospects for growth and the market price of the notes and other debt securities, among other things; |
• | result in downgrades in the credit ratings on our indebtedness, which could limit our ability to borrow additional funds on favorable terms or at all (including in order to refinance our other debt), increase the interest rates under our credit facilities (including the Hasbro term loan facility) and under any new indebtedness we may incur, and reduce the trading prices of our outstanding debt securities and common stock; |
• | make it more difficult for us to raise capital to fund working capital, make capital expenditures, pay dividends, pursue strategic initiatives or for other purposes; |
• | result in higher interest expense, which could be further increased in case of current or future borrowings subject to variable rates of interest; |
• | require that materially adverse terms, conditions or covenants be placed on us under our debt instruments, which could include, for example, limitations on additional borrowings or limitations on our ability to create liens, pay dividends, repurchase our common stock or make investments, any of which could hinder our access to capital markets or our flexibility in the conduct of our business and make us more vulnerable to economic downturns and adverse competitive industry conditions; and |
• | jeopardize our ability to pay our indebtedness if we were to experience a severe downturn in our business. |
• | the ability to successfully apply capabilities and expertise in certain areas of the business to other areas of the combined business; |
• | integration of management teams into a cohesive combined company; |
• | differences in business backgrounds and models, corporate cultures and management philosophies; |
• | the ability to continue to attract and retain key management and personnel; |
• | the ability to create and implement a unified strategy, controls, procedures, policies and information systems; |
• | the challenge of integrating complex systems, technology, networks and other assets of eOne into those of ours in a manner that minimizes any adverse impact on customers, consumers, suppliers, employees and other constituencies; |
• | potential unknown liabilities and unforeseen expenses or delays associated with the acquisition, including costs to integrate eOne; and |
• | the disruption of, or the loss of momentum in, our ongoing businesses, including the diversion of management’s attention away from ongoing business and towards integration matters. |
Item 1B. | Unresolved Staff Comments. |
Item 2. | Properties. |
Item 3. | Legal Proceedings. |
Item 4. | Mine Safety Disclosures. |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
(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 Program | ||||||
October 2019 9/30/19 — 10/27/19 | 12,484 | $ | 100.12 | 12,484 | $ | 366,592,558 | |||
November 2019 10/28/19 — 12/01/19 | — | $ | — | — | $ | — | |||
December 2019 12/02/19 — 12/29/19 | — | $ | — | — | $ | — | |||
Total | 12,484 | $ | 100.12 | 12,484 | $ | 366,592,558 |
Item 6. | Selected Financial Data. |
Fiscal Year | |||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||
Consolidated Statements of Operations Data: | |||||||||||
Net revenues | $ | 4,720,227 | 4,579,646 | 5,209,782 | 5,019,822 | 4,447,509 | |||||
Operating Profit | $ | 652,050 | 331,052 | 810,359 | 788,048 | 691,933 | |||||
Net earnings | $ | 520,454 | 220,434 | 396,607 | 533,151 | 446,872 | |||||
Net loss attributable to noncontrolling interests | $ | — | — | — | (18,229 | ) | (4,966 | ) | |||
Net earnings attributable to Hasbro, Inc. | $ | 520,454 | 220,434 | 396,607 | 551,380 | 451,838 | |||||
Per Common Share Data: | |||||||||||
Net Earnings Attributable to Hasbro, Inc. | |||||||||||
Basic | $ | 4.07 | 1.75 | 3.17 | 4.40 | 3.61 | |||||
Diluted | $ | 4.05 | 1.74 | 3.12 | 4.34 | 3.57 | |||||
Cash dividends declared | $ | 2.72 | 2.52 | 2.28 | 2.04 | 1.84 | |||||
Consolidated Balance Sheets Data: | |||||||||||
Total assets | $ | 8,855,628 | 5,262,988 | 5,289,983 | 5,091,366 | 4,720,717 | |||||
Total long-term debt (1) | $ | 4,084,895 | 1,709,895 | 1,709,895 | 1,559,895 | 1,559,895 | |||||
Weighted Average Number of Common Shares: | |||||||||||
Basic | 127,896 | 126,132 | 125,039 | 125,292 | 125,006 | ||||||
Diluted | 128,499 | 126,890 | 127,031 | 126,966 | 126,688 |
(1) | Represents principal balance of long-term debt. Excludes related deferred debt expenses. |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
• | Net revenues of $4,720.2 million increased 3% from $4,579.6 million in 2018. The increase in net revenues includes an unfavorable foreign currency translation of $78.5 million. |
• | U.S. and Canada segment net revenues increased 3%; International segment net revenues decreased 1%, including an unfavorable foreign currency translation impact of $76.5 million; Entertainment, Licensing and Digital segment net revenues increased 22%. |
• | Partner Brands net revenues increased 24%; Emerging Brands net revenues increased 5%; Franchise Brands net revenues declined 1%; Hasbro Gaming net revenues declined 10%. |
• | Operating profit was $652.1 million, or 13.8% of net revenues in 2019 compared to operating profit of $331.1 million, or 7.2% of net revenues in 2018. |
• | 2019 operating profit was negatively impacted by $17.8 million of pre-tax acquisition related costs associated with the eOne transaction. |
• | 2018 operating profit was negatively impacted by $60.4 million of costs related to the Toys"R"Us bankruptcy, $89.3 million associated with the Company’s 2018 restructuring program and impairment charges of $117.6 million related to Backflip Studios and other intangible assets. |
• | Net earnings increased in 2019 to $520.5 million, or $4.05 per diluted share, compared to $220.4 million, or $1.74 per diluted share in 2018. |
• | 2019 net earnings were impacted by pension settlement charges, net of tax, of $86.0 million, or $0.67 per diluted share, partially offset by a net benefit, net of tax, of $81.8 million, or $0.64 per diluted share, from foreign currency gains related to hedging a portion of the eOne British pound sterling purchase price and other eOne acquisition related costs. |
• | 2018 net earnings were negatively impacted by costs related to the Toys"R"Us bankruptcy, net of tax, of $52.8 million or $0.42 per diluted share, impairment charges related to Backflip Studios and other intangible assets, net of tax, of $96.9 million, or $0.76 per diluted share, costs associated with the Company’s 2018 restructuring program, net of tax, of $77.9 million or $0.61 per diluted share and charges related to adjustments to provisional U.S. Tax Reform amounts of $40.7 million or $0.32 per diluted share. |
• | Net revenues of $4,579.6 million decreased 12% from 5,209.8 million in 2017. The decline in net revenues included an unfavorable foreign currency translation of $43.0 million. |
• | U.S. and Canada segment net revenues declined 10%; International segment net revenues declined 17% and included an unfavorable foreign currency translation impact of $41.7 million; Entertainment and Licensing segment net revenues increased 9%. |
• | Franchise Brands net revenues declined 9%, Partner Brands net revenues declined 22%, Hasbro Gaming net revenues declined 12% and Emerging Brands net revenues increased 1%. |
• | Operating profit was $331.1 million, or 7.2% of net revenues in 2018 compared to operating profit of $810.4 million, or 15.6% of net revenues in 2017. |
• | 2018 operating profit was negatively impacted by: non-cash goodwill and intangible asset impairment charges of $117.6 million related to Backflip Studios and other intangible assets; severance costs of $89.3 million associated with the Company's 2018 restructuring program; and $60.4 million of costs related to the Toys"R"Us bankruptcy. |
• | 2017 operating profit was negatively impacted by the Toys"R"Us bankruptcy in the U.S. and Canada as a result of incremental bad debt expense recorded during the third quarter of 2017. |
• | Impact from U.S. tax reform resulted in a net charge of $40.7 million in 2018 due to the remeasurement of liabilities based on additional guidance and regulations issued in 2018. |
• | Net earnings declined in 2018 to $220.4 million, or $1.74 per diluted share, compared to $396.6 million, or $3.12 per diluted share in 2017. |
2019 | 2018 | 2017 | ||||
Net Revenues | 100.0 | % | 100.0 | % | 100.0 | % |
Operating profit | 13.8 | 7.2 | 15.6 | |||
Earnings before income taxes | 12.6 | 5.9 | 15.1 | |||
Net earnings | 11.0 | 4.8 | 7.6 |
• | A net charge of $86.0 million or $0.67 per diluted share associated with the settlement of the Company's U.S. defined benefit pension plan in the second quarter of 2019. During 2018 the Compensation Committee of the Company's Board of Directors approved a resolution to terminate the Company's U.S. defined benefit pension plan and commenced the termination process. During the second and fourth quarters of 2019, the Company settled remaining benefits directly with vested participants. |
• | A net benefit, of $81.8 million or $0.64 per diluted share related to transaction costs and hedge gains associated with the Company's agreement to acquire eOne in an all cash transaction. The $81.8 million after-tax gain consisted of the following: (i) hedge gains of $114.1 million related to the foreign exchange forward and option contracts to hedge a portion of the eOne purchase price and related costs; (ii) financing transaction fees of $20.6 million, primary related to the Company’s bridge facility which was terminated unused in the fourth quarter of 2019; (iii) eOne acquisition costs of $17.8 million during the fourth quarter of 2019; and (iv) tax benefits of $6.1 million for the full year 2019 related to the charges outlined in (ii) and (iii) above. |
• | A net charge of $96.9 million or $0.76 per diluted share associated with a fourth quarter 2018 non-cash goodwill impairment charge related to the Company’s Backflip Studios goodwill and impairment of certain other definite-lived intangible assets. |
• | A net charge of $77.9 million or $0.61 per diluted share of severance costs associated with organizational restructuring. In the first quarter of 2018, the Company incurred a net charge of $15.7 million of severance charges, and in the fourth quarter of 2018, the Company recorded an additional net charge of $62.2 million of severance charges related to actions associated with its 2018 restructuring program. |
• | A net charge of $52.8 million or $0.42 per diluted share related to the Toys“R”Us bankruptcy and liquidation of its U.S. and other operations around the globe. The Company recognized incremental bad debt expense on outstanding Toys“R”Us receivables, royalty expense, inventory obsolescence as well as other related costs. In the fourth quarter of 2018, based on its final settlement with Toys“R”Us, the Company made adjustments to charges previously recorded during 2018. |
• | A net charge of $40.7 million or $0.32 per diluted share related to U.S. tax reform. In 2018 the Company made adjustments to provisional U.S. Tax Reform amounts recorded in the fourth quarter of 2017, based on additional guidance issued by the U.S. Treasury Department and the Internal Revenue Service during 2018. |
• | A net charge of $296.5 million or $2.33 per diluted share related to U.S. tax reform. This net charge includes a $316.4 million charge included in income taxes due to the estimated repatriation tax liability and adjustments to the Company’s deferred tax assets and liabilities; partially offset by a $19.9 million gain within other income due to the change in the value of a long-term liability following the change in the U.S. corporate tax rate beginning in 2018. |
2019 Net Revenues | % Change | 2018 Net Revenues | % Change | 2017 Net Revenues | % Change | ||||||||||
Franchise Brands | $ | 2,411.8 | -1.4 | % | $ | 2,445.9 | -9.1 | % | $ | 2,690.4 | 13.3 | % | |||
Partner Brands | 1,221.0 | 23.7 | % | 987.3 | -22.4 | % | 1,271.6 | -10.0 | % | ||||||
Hasbro Gaming | 709.8 | -9.9 | % | 787.7 | -11.8 | % | 893.0 | 9.8 | % | ||||||
Emerging Brands | 377.6 | 5.2 | % | 358.8 | 1.1 | % | 354.8 | -15.2 | % |
2019 Net Revenues | % Change | 2018 Net Revenues | % Change | 2017 Net Revenues | % Change | ||||||||||
U.S. and Canada * | $ | 2,449.3 | 3.1 | % | $ | 2,375.7 | -10.4 | % | $ | 2,650.7 | 3.5 | % | |||
International | 1,836.4 | -0.6 | % | 1,847.6 | -17.3 | % | 2,233.6 | 1.8 | % | ||||||
Entertainment, Licensing and Digital * | 434.5 | 21.9 | % | 356.3 | 9.5 | % | 325.4 | 22.7 | % |
2019 | % Net Revenues | % Change | 2018 | % Net Revenues | % Change | 2017 | % Net Revenues | ||||||||||||
U.S. and Canada | $ | 415.4 | 17.0 | % | 12 | % | $ | 370.2 | 15.6 | % | -29 | % | $ | 523.9 | 19.8 | % | |||
International | 107.3 | 5.8 | % | >100% | 39.5 | 2.1 | % | -83 | % | 228.7 | 10.2 | % | |||||||
Entertainment & Licensing | 99.7 | 22.9 | % | >100% | 29.1 | 8.2 | % | -65 | % | 82.4 | 25.3 | % |
2019 | 2018 | 2017 | ||||
Cost of sales | 38.3 | % | 40.4 | % | 39.0 | % |
Royalties | 8.8 | 7.7 | 7.8 | |||
Product development | 5.6 | 5.4 | 5.2 | |||
Advertising | 8.8 | 9.6 | 9.6 | |||
Amortization of intangibles | 1.0 | 0.6 | 0.6 | |||
Program production cost amortization | 1.8 | 1.0 | 0.7 | |||
Selling, distribution and administration | 22.0 | 28.1 | 21.6 |
• | During 2019, the Company incurred acquisition costs related to eOne of $17.8 million within administrative expenses in the Corporate and Eliminations segment. |
• | During 2018, the Company recognized charges of $60.4 million consisting of incremental bad debt expense on outstanding Toys“R”Us receivables, royalty expense, inventory obsolescence as well as other costs related to the Toys“R”Us bankruptcy. |
• | During 2018, the Company incurred $89.3 million of severance charges, related to the 2018 restructuring program. These charges were recorded within selling, distribution and administration ("SD&A") expenses and included in Corporate and Eliminations. |
• | During 2018, the Company recorded $117.6 million in goodwill impairment and other intangible asset impairment charges, all within administrative expenses in the Entertainment, Licensing & Digital segment and the Corporate and Eliminations segment. |
• | During 2017 the Company recorded incremental bad debt expenses of $18.0 million within SD&A, related to the bankruptcy filings by Toys“R”Us in the U.S. and Canada. |
2019 | 2018 | 2017 | |||||||
Foreign currency (gains) losses | $ | (124.3 | ) | 10.8 | (1.3 | ) | |||
Earnings from Discovery Family Channel | (23.6 | ) | (21.1 | ) | (23.3 | ) | |||
Discovery tax sharing agreement revaluation | — | — | (19.9 | ) | |||||
Pension expense | 119.5 | 5.8 | — | ||||||
eOne deferred financing costs | 19.6 | — | — | ||||||
Gain on sale of certain investments | (6.1 | ) | (3.0 | ) | (3.3 | ) | |||
Other | 1.0 | (0.3 | ) | (4.1 | ) | ||||
$ | (13.9 | ) | (7.8 | ) | (51.9 | ) |
• | Foreign currency gains in 2019 reflect realized and unrealized gains of approximately $114.1 million on the foreign exchange forward and option contracts entered to hedge a portion of the British pound sterling purchase price in relation to the eOne acquisition. Foreign currency losses in 2018 compared to foreign |
• | Earnings from the Discovery joint venture are comprised of the Company’s share in the results of the Network. |
• | In relation to their joint venture, Hasbro and Discovery are party to a tax sharing agreement. Due to a change in tax law, the liability representing future payments was revalued to reflect the lower future U.S. corporate tax rate beginning in 2018, which resulted in a $19.9 million gain in 2017. |
• | As a result of the adoption of Accounting Standards Update No. 2017-07 (ASU 2017-07), Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost in 2018, non-service cost components of pension expense previously recorded to operating expense, are now recorded to other expense. |
• | During 2019, the Company incurred $111.0 million of settlement charges related to the termination of its U.S. defined benefit pension plan which is reflected as a non-cash charge to pension expense. |
• | During 2019, the Company incurred costs associated with the financing of the eOne transaction. With the termination of the bridge facility, the Company wrote off the associated financing costs in the fourth quarter of 2019. |
• | The 2019, 2018 and 2017 gain on investments primarily reflects proceeds from the sale of certain long-term investments sold during the year. |
• | In relation to their joint venture, Discovery owns an option to purchase Hasbro’s share of the Discovery Family Channel. The option’s fair value is periodically re-measured and represents a $1.3 million gain in 2019, a $0.5 million gain in 2018 and a $4.8 million gain in 2017 (included in other in the table above) due to the option’s value decrease. |
2019 | % | 2018 | % | 2017 | |||||||||||||
Cash and cash equivalents, net of short-term borrowings | $ | 4,580.4 | >100% | $ | 1,172.6 | -18 | % | $ | 1,426.3 | ||||||||
Accounts receivable, net | 1,410.6 | 19 | % | 1,188.1 | -15 | % | 1,405.4 | ||||||||||
Inventories | 446.1 | 1 | % | 443.4 | 2 | % | 433.3 | ||||||||||
Prepaid expenses and other current assets | 310.5 | 16 | % | 268.7 | 26 | % | 214.0 | ||||||||||
Other assets | 585.0 | -21 | % | 744.3 | 23 | % | 605.9 | ||||||||||
Accounts payable and accrued liabilities | 1,256.6 | -1 | % | 1,264.6 | 15 | % | 1,096.7 | ||||||||||
Other liabilities | 556.6 | 3 | % | 539.1 | 5 | % | 514.7 |
2019 | 2018 | 2017 | |||||||||
Net cash provided by (used in) | |||||||||||
Operating Activities | $ | 653.1 | $ | 646.0 | $ | 724.4 | |||||
Investing Activities | (61.0 | ) | (286.5 | ) | (131.5 | ) | |||||
Financing Activities | 2,810.6 | (737.1 | ) | (312.2 | ) |
• | Net proceeds of $2,355.0 million from the November 2019 issuance of an aggregate of $2,375.0 million of senior unsecured long-term debt securities consisting of the following tranches: $300.0 million 2.60% notes due 2022; $500.0 million 3.00% notes due 2024; $675.0 million 3.55% notes due 2026; and $900.0 million 3.90% notes due 2029. The proceeds were net of debt issuance discount and fees of $20.0 million. The proceeds of the long-term debt issuance were used to finance, in part, the acquisition of eOne. |
• | Net proceeds of $975.2 million from the issuance of 10,592,106 shares of common stock, par value $0.50 per share, at a public offering price of $95.00 per share. |
• | Debt acquisition costs of $26.7 million paid in relation to eOne acquisition financing arrangements. |
Payments due by Fiscal Year | |||||||||||||||||||||
Certain Contractual Obligations | 2020 | 2021 | 2022 | 2023 | 2024 | Thereafter | Total | ||||||||||||||
Long-term debt | $ | — | 300.0 | 300.0 | — | 500.0 | 2,984.9 | 4,084.9 | |||||||||||||
Interest payments on long-term debt | 163.1 | 158.4 | 153.7 | 145.9 | 145.9 | 1,095.4 | 1,862.4 | ||||||||||||||
Operating lease commitments | 36.4 | 31.8 | 28.8 | 22.6 | 13.1 | 33.6 | 166.3 | ||||||||||||||
Future minimum guaranteed contractual royalty payments | 111.0 | 98.5 | 66.9 | 0.2 | 0.2 | 0.5 | 277.3 | ||||||||||||||
Transition Taxa | 18.4 | 18.4 | 18.4 | 34.4 | 45.9 | 57.3 | 192.8 | ||||||||||||||
Tax sharing agreementb | 4.7 | 4.9 | 5.1 | 5.4 | 6.0 | 3.2 | 29.3 | ||||||||||||||
Purchase commitmentsc | 386.0 | 105.0 | 95.0 | 85.0 | — | — | 671.0 | ||||||||||||||
$ | 719.6 | 717.0 | 667.9 | 293.5 | 711.1 | 4,174.9 | 7,284.0 |
a | As discussed above, the Tax Act requires the Company to pay a one-time mandatory deemed repatriation tax on undistributed foreign earnings of $308.0 million. The Company utilized $78.5 million of existing tax credits to reduce the $308.0 million U.S. federal income tax liability, which resulted in $229.5 million to be paid in interest-free installments through 2025, of which $18.4 million was paid in 2019 and 2018. See note 11 to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for further discussion. |
b | In connection with the Company’s agreement to form a joint venture with Discovery, the Company is obligated to make future payments to Discovery under a tax sharing agreement. These payments are contingent upon the Company having sufficient taxable income to realize the expected tax deductions of certain amounts related to the joint venture. Accordingly, estimates of these amounts are included in the table above. |
c | Purchase commitments represent agreements (including open purchase orders) to purchase inventory and tooling in the ordinary course of business as well as purchase commitments under a manufacturing agreement. The reported amounts exclude inventory and tooling purchase liabilities included in accounts payable or accrued liabilities on the consolidated balance sheets as of December 29, 2019. |
• | Included in other liabilities in the consolidated balance sheets at December 29, 2019, the Company has a liability of $42.2 million of potential tax, interest and penalties for uncertain tax positions that have been taken or are expected to be taken in various income tax returns. The Company does not know the ultimate resolution of these uncertain tax positions and as such, does not know the ultimate amount or timing of payments related to this liability. |
• | At December 29, 2019, the Company had letters of credit and related instruments of approximately $14.0 million. |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 8. | Financial Statements and Supplementary Data. |
• | evaluating the discount rate by comparing it against a discount rate range that was independently developed using publicly available market data for comparable entities; |
• | evaluating the terminal growth rate by comparing it against publicly available industry reports and to DFC’s historical revenue growth; and |
• | developing an estimate of the fair value of the investment using (1) DFC’s forecasted cash flows and estimated terminal growth rate and (2) an independently developed discount rate, which was then compared to the Company’s fair value estimate. |
2019 | 2018 | |||||
ASSETS | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | |||||
Accounts receivable, less allowance for doubtful accounts of $17,200 in 2019 and $9,100 in 2018 | ||||||
Inventories | ||||||
Prepaid expenses and other current assets | ||||||
Total current assets | ||||||
Property, plant and equipment, net | ||||||
Other assets | ||||||
Goodwill | ||||||
Other intangibles, net | ||||||
Other | ||||||
Total other assets | ||||||
Total assets | $ | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current liabilities | ||||||
Short-term borrowings | $ | |||||
Accounts payable | ||||||
Accrued liabilities | ||||||
Total current liabilities | ||||||
Long-term debt | ||||||
Other liabilities | ||||||
Total liabilities | ||||||
Shareholders’ equity | ||||||
Preference stock of $2.50 par value. Authorized 5,000,000 shares; none issued | ||||||
Common stock of $0.50 par value. Authorized 600,000,000 shares; issued 220,286,736 shares as of 2019 and 209,694,630 shares as of 2018 | ||||||
Additional paid-in capital | ||||||
Retained earnings | ||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | ||
Treasury stock, at cost, 83,424,129 shares in 2019 and 83,565,598 shares in 2018 | ( | ) | ( | ) | ||
Total shareholders’ equity | ||||||
Total liabilities and shareholders’ equity | $ |
2019 | 2018 | 2017 | |||||||
Net revenues | $ | ||||||||
Costs and expenses | |||||||||
Cost of sales | |||||||||
Royalties | |||||||||
Product development | |||||||||
Advertising | |||||||||
Amortization of intangible assets | |||||||||
Program production cost amortization | |||||||||
Selling, distribution and administration | |||||||||
Total expenses | |||||||||
Operating profit | |||||||||
Non-operating (income) expense | |||||||||
Interest expense | |||||||||
Interest income | ( | ) | ( | ) | ( | ) | |||
Other (income) expense, net | ( | ) | ( | ) | ( | ) | |||
Total non-operating expense, net | |||||||||
Earnings before income taxes | |||||||||
Income taxes | |||||||||
Net earnings | $ | ||||||||
Per common share | |||||||||
Net earnings | |||||||||
Basic | $ | ||||||||
Diluted | $ | ||||||||
Cash dividends declared | $ |
2019 | 2018 | 2017 | |||||||
Net earnings | $ | ||||||||
Other comprehensive earnings (loss): | |||||||||
Foreign currency translation adjustments | ( | ) | |||||||
Unrealized holding gains (losses) on available-for-sale securities, net of tax | ( | ) | ( | ) | |||||
Net gains (losses) on cash flow hedging activities, net of tax | ( | ) | |||||||
Changes in unrecognized pension and postretirement amounts, net of tax | ( | ) | |||||||
Reclassifications to earnings, net of tax: | |||||||||
Net (gains) losses on cash flow hedging activities | ( | ) | |||||||
Amortization of unrecognized pension and postretirement amounts | |||||||||
Settlement of U.S. defined benefit plan | |||||||||
Total other comprehensive earnings (loss), net of tax | ( | ) | ( | ) | |||||
Total comprehensive earnings | $ |
2019 | 2018 | 2017 | |||||||
Cash flows from operating activities | |||||||||
Net earnings | $ | ||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||
Depreciation of property, plant and equipment | |||||||||
Impairment of goodwill | |||||||||
Impairment of intangible assets | |||||||||
Pension Settlement | |||||||||
Amortization of intangible assets | |||||||||
Program production cost amortization | |||||||||
Deferred income taxes | ( | ) | ( | ) | |||||
Stock-based compensation | |||||||||
Other non-cash items | ( | ) | ( | ) | ( | ) | |||
Changes in operating assets and liabilities, net of acquired and disposed balances: | |||||||||
(Increase) decrease in accounts receivable | ( | ) | ( | ) | |||||
Increase in inventories | ( | ) | ( | ) | ( | ) | |||
Decrease (increase) in prepaid expenses and other current assets | ( | ) | |||||||
Program production costs, net of tax rebates received | ( | ) | ( | ) | ( | ) | |||
Increase (decrease) in accounts payable and accrued liabilities | ( | ) | |||||||
Net deemed repatriation tax | ( | ) | |||||||
Other, including long-term advances | ( | ) | ( | ) | ( | ) | |||
Net cash provided by operating activities | |||||||||
Cash flows from investing activities | |||||||||
Additions to property, plant and equipment | ( | ) | ( | ) | ( | ) | |||
Investments and acquisitions, net of cash acquired | ( | ) | ( | ) | |||||
Net gains on derivative contracts | |||||||||
Other | |||||||||
Net cash utilized by investing activities | ( | ) | ( | ) | ( | ) | |||
Cash flows from financing activities | |||||||||
Net proceeds from borrowings with maturity greater than three months | |||||||||
Repayments of borrowings with maturity greater than three months | ( | ) | |||||||
Net repayments of other short-term borrowings | ( | ) | ( | ) | ( | ) | |||
Purchases of common stock | ( | ) | ( | ) | ( | ) | |||
Stock-based compensation transactions | |||||||||
Dividends paid | ( | ) | ( | ) | ( | ) | |||
Payments related to tax withholding for share-based compensation | ( | ) | ( | ) | ( | ) | |||
Deferred acquisition payments | ( | ) | |||||||
Proceeds from issuance of common stock | |||||||||
Deferred financing fees paid | ( | ) | |||||||
Other | ( | ) | ( | ) | ( | ) | |||
Net cash provided (utilized) by financing activities | ( | ) | ( | ) | |||||
Effect of exchange rate changes on cash | ( | ) | ( | ) | |||||
Increase (decrease) in cash and cash equivalents | ( | ) | |||||||
Cash and cash equivalents at beginning of year | |||||||||
Cash and cash equivalents at end of year | $ | ||||||||
Supplemental information | |||||||||
Interest paid | $ | ||||||||
Income taxes paid | $ |
Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total Shareholders’ Equity | Redeemable Noncontrolling Interests | ||||||||||||||||||
Balance, December 25, 2016 | $ | ( | ) | ( | ) | $ | $ | |||||||||||||||||
Net earnings | — | — | — | — | — | |||||||||||||||||||
Impact of adoption of ASU 2016-09 | — | ( | ) | — | — | |||||||||||||||||||
Acquisition of remaining interest in Backflip | — | — | — | — | ( | ) | ||||||||||||||||||
Other comprehensive loss | — | — | — | ( | ) | — | ( | ) | — | |||||||||||||||
Stock-based compensation transactions | — | ( | ) | — | — | ( | ) | ( | ) | — | ||||||||||||||
Purchases of common stock | — | — | — | — | ( | ) | ( | ) | — | |||||||||||||||
Stock-based compensation expense | — | — | — | — | ||||||||||||||||||||
Dividends declared | — | — | ( | ) | — | — | ( | ) | — | |||||||||||||||
Balance, December 31, 2017 | $ | ( | ) | ( | ) | $ | $ | |||||||||||||||||
Net earnings | — | — | — | — | — | |||||||||||||||||||
Impact of adoption of ASU 2018-02 | — | — | ( | ) | — | |||||||||||||||||||
Issuance of shares for Saban purchase | — | — | — | — | ||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | ) | — | ( | ) | — | |||||||||||||||
Stock-based compensation transactions | — | ( | ) | — | — | ( | ) | ( | ) | — | ||||||||||||||
Purchases of common stock | — | — | — | — | ( | ) | ( | ) | — | |||||||||||||||
Stock-based compensation expense | — | — | — | — | ||||||||||||||||||||
Dividends declared | — | — | ( | ) | — | — | ( | ) | — | |||||||||||||||
Balance, December 30, 2018 | $ | ( | ) | ( | ) | $ | $ | |||||||||||||||||
Net earnings | — | — | — | — | — | |||||||||||||||||||
Equity Issuance, net of fees | — | — | — | |||||||||||||||||||||
Other comprehensive earnings | — | — | — | — | — | |||||||||||||||||||
Stock-based compensation transactions | — | — | — | — | ||||||||||||||||||||
Purchases of common stock | — | — | — | — | ( | ) | ( | ) | — | |||||||||||||||
Stock-based compensation expense | — | — | — | — | ||||||||||||||||||||
Dividends declared | — | — | ( | ) | — | — | ( | ) | — | |||||||||||||||
Balance, December 29, 2019 | $ | ( | ) | ( | ) | $ | $ |
(1) | Summary of Significant Accounting Policies |
2019 | 2018 | 2017 | ||||||||||||||||
Basic | Diluted | Basic | Diluted | Basic | Diluted | |||||||||||||
Net earnings attributable to Hasbro, Inc. | $ | |||||||||||||||||
Average shares outstanding | ||||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||
Options and other share-based awards | — | — | — | |||||||||||||||
Equivalent shares | ||||||||||||||||||
Net earnings attributable to Hasbro, Inc. per share | $ |
(2) | Revenue Recognition |
(3) | Other Comprehensive Earnings (Loss) |
2019 | 2018 | 2017 | ||||||||
Other comprehensive earnings (loss), tax effect: | ||||||||||
Tax (expense) benefit on unrealized holding (losses) gains | $ | ( | ) | $ | ||||||
Tax benefit (expense) on cash flow hedging activities | ( | ) | ||||||||
Tax (expense) benefit on changes in unrecognized pension amounts | ( | ) | ( | ) | ||||||
Reclassifications to earnings, tax effect: | ||||||||||
Tax expense (benefit) on cash flow hedging activities | ( | ) | ||||||||
Tax benefit on amortization of unrecognized pension and postretirement amounts reclassified to the consolidated statements of operations | ( | ) | ( | ) | ( | ) | ||||
Tax benefit on settlement of U.S. defined benefit plan | ( | ) | ||||||||
Total tax effect on other comprehensive earnings (loss) | $ | ( | ) | ( | ) |
Pension and Postretirement Amounts | Gains (Losses) on Derivative Instruments | Unrealized Holding Gains on Available for-Sale Securities | Foreign Currency Translation Adjustments | Total Accumulated Other Comprehensive Earnings (Loss) | |||||||||||
2019 | |||||||||||||||
Balance at December 30, 2018 | $ | ( | ) | ( | ) | ( | ) | ( | ) | ||||||
Current period other comprehensive earnings (loss) | |||||||||||||||
Reclassifications from AOCE to earnings | ( | ) | |||||||||||||
Balance at December 29, 2019 | $ | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||
2018 | |||||||||||||||
Balance at December 31, 2017 | $ | ( | ) | ( | ) | ( | ) | ( | ) | ||||||
Adoption of ASU 2018-02 | ( | ) | ( | ) | ( | ) | |||||||||
Current period other comprehensive earnings (loss) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Reclassifications from AOCE to earnings | |||||||||||||||
Balance at December 30, 2018 | $ | ( | ) | ( | ) | ( | ) | ( | ) | ||||||
2017 | |||||||||||||||
Balance at December 25, 2016 | $ | ( | ) | ( | ) | ( | ) | ||||||||
Current period other comprehensive earnings (loss) | ( | ) | ( | ) | ( | ) | |||||||||
Reclassifications from AOCE to earnings | |||||||||||||||
Balance at December 31, 2017 | $ | ( | ) | ( | ) | ( | ) | ( | ) |
(4) | Property, Plant and Equipment |
2019 | 2018 | ||||||
Land and improvements | $ | ||||||
Buildings and improvements | |||||||
Machinery, equipment and software | |||||||
Less accumulated depreciation | |||||||
Tools, dies and molds, net of accumulated depreciation | |||||||
Right of use assets | — | ||||||
Less accumulated depreciation | — | ||||||
Total property, plant and equipment, net | $ | $ |
(5) | Goodwill and Intangible Assets |
U.S. and Canada | International | Entertainment, Licensing and Digital | Total | |||||||||
2019 | ||||||||||||
Balance at December 30, 2018 | $ | |||||||||||
Acquired during the period | ||||||||||||
Wizards of the Coast Digital Reclassification | ( | ) | ||||||||||
Foreign exchange translation | ( | ) | ( | ) | ( | ) | ||||||
Balance at December 29, 2019 | $ | |||||||||||
2018 | ||||||||||||
Balance at December 31, 2017 | $ | |||||||||||
Impairment during the period | ( | ) | ( | ) | ||||||||
Foreign exchange translation | ( | ) | ( | ) | ( | ) | ||||||
Balance at December 30, 2018 | $ |
2019 | 2018 | |||||
Acquired product rights | $ | |||||
Licensed rights of entertainment properties | ||||||
Accumulated amortization | ( | ) | ( | ) | ||
Amortizable intangible assets | ||||||
Product rights with indefinite lives | ||||||
Total other intangibles assets, net | $ |
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 |
(6) | Equity Method Investment |
2019 | 2018 | |||||
Television programming | ||||||
Released, less amortization | $ | |||||
In production | ||||||
Pre-production | ||||||
Theatrical programming | ||||||
Released, less amortization | ||||||
In production | ||||||
Pre-production | ||||||
Total program production costs | $ |
(8) | Financing Arrangements |
(9) | Accrued Liabilities |
2019 | 2018 | ||||||
Royalties | $ | $ | |||||
Advertising | |||||||
Payroll and management incentives | |||||||
Dividends | |||||||
Severance | |||||||
Deferred payment on Power Rangers Acquisition | |||||||
Other Taxes | |||||||
Other | |||||||
Total accrued liabilities | $ |
(10) | Long-Term Debt |
2019 | 2018 | |||||||||||
Carrying Cost | Fair Value | Carrying Cost | Fair Value | |||||||||
3.90% Notes Due 2029 | $ | |||||||||||
3.55% Notes Due 2026 | ||||||||||||
3.00% Notes Due 2024 | ||||||||||||
6.35% Notes Due 2040 | ||||||||||||
3.50% Notes Due 2027 | ||||||||||||
2.60% Notes Due 2022 | ||||||||||||
5.10% Notes Due 2044 | ||||||||||||
3.15% Notes Due 2021 | ||||||||||||
6.60% Debentures Due 2028 | ||||||||||||
Total long-term debt | ||||||||||||
Less: Deferred debt expenses | — | — | ||||||||||
Long-term debt | $ |
(11) | Income Taxes |
2019 | 2018 | 2017 | |||||||
United States | $ | ||||||||
International | |||||||||
Total earnings before income taxes | $ |
2019 | 2018 | 2017 | |||||||
Current | |||||||||
United States | $ | ||||||||
State and local | |||||||||
International | |||||||||
Deferred | |||||||||
United States | ( | ) | ( | ) | |||||
State and local | ( | ) | ( | ) | |||||
International | ( | ) | |||||||
( | ) | ( | ) | ||||||
Total income taxes | $ |
2019 | 2018 | 2017 | ||||||
Statutory income tax rate | % | % | % | |||||
State and local income taxes, net | ||||||||
Tax on international earnings | ( | ) | ( | ) | ( | ) | ||
Change in unrecognized tax benefits | ( | ) | ||||||
Share-based compensation | ( | ) | ( | ) | ( | ) | ||
Tax Cuts and Jobs Act of 2017 | ||||||||
Research and development tax credits | ( | ) | ( | ) | ( | ) | ||
Non-deductible goodwill impairment | ||||||||
Gains on integrated hedging instruments | ( | ) | ||||||
Other, net | ||||||||
% | % | % |
2019 | 2018 | |||||
Deferred tax assets: | ||||||
Accounts receivable | $ | |||||
Inventories | ||||||
Loss and credit carryforwards | ||||||
Operating leases | — | |||||
Operating expenses | ||||||
Pension | ||||||
Other compensation | ||||||
Postretirement benefits | ||||||
Interest rate hedge | ||||||
Tax sharing agreement | ||||||
Other | ||||||
Gross deferred tax assets | ||||||
Valuation allowance | ( | ) | ( | ) | ||
Net deferred tax assets | ||||||
Deferred tax liabilities: | ||||||
Depreciation and amortization of long-lived assets | ||||||
Equity method investment | ||||||
Operating leases | — | |||||
Other | ||||||
Deferred tax liabilities | ||||||
Net deferred income taxes | $ |
2019 | 2018 | |||||
Other assets | ||||||
Other liabilities | ( | ) | ( | ) | ||
Net deferred income taxes | $ |
2019 | 2018 | 2017 | |||||||
Balance at beginning of year | $ | ||||||||
Gross increases in prior period tax positions | |||||||||
Gross decreases in prior period tax positions | ( | ) | ( | ) | |||||
Gross increases in current period tax positions | |||||||||
Decreases related to settlements with tax authorities | ( | ) | ( | ) | ( | ) | |||
Decreases from the expiration of statute of limitations | ( | ) | ( | ) | ( | ) | |||
Balance at end of year | $ |
(12) | Capital Stock |
(13) | Fair Value of Financial Instruments |
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) | |||||||||
December 29, 2019 | ||||||||||||
Assets: | ||||||||||||
Available-for-sale securities | $ | |||||||||||
Derivatives | ||||||||||||
Total assets | $ | |||||||||||
Liabilities: | ||||||||||||
Derivatives | $ | |||||||||||
Option agreement | ||||||||||||
Total liabilities | $ | |||||||||||
December 30, 2018 | ||||||||||||
Assets: | ||||||||||||
Available-for-sale securities | $ | |||||||||||
Derivatives | ||||||||||||
Total assets | $ | |||||||||||
Liabilities: | ||||||||||||
Derivatives | $ | |||||||||||
Option agreement | ||||||||||||
Total liabilities | $ |
2019 | 2018 | |||||
Balance at beginning of year | $ | ( | ) | ( | ) | |
Net gains from change in fair value | ||||||
Balance at end of year | $ | ( | ) | ( | ) |
(14) | Stock Options, Other Stock Awards and Warrants |
2019 | 2018 | 2017 | |||||||
Product development | $ | ||||||||
Selling, distribution and administration | |||||||||
Income tax benefit | |||||||||
$ |
2019 | 2018 | 2017 | |||||||
Stock performance awards | $ | ( | ) | ||||||
Restricted stock units | |||||||||
Stock options | |||||||||
Non-employee awards | |||||||||
Income tax benefit | |||||||||
$ |
2019 | 2018 | 2017 | |||||||
Outstanding at beginning of year | |||||||||
Granted | |||||||||
Forfeited | ( | ) | ( | ) | ( | ) | |||
Canceled | ( | ) | |||||||
Vested | ( | ) | ( | ) | ( | ) | |||
Outstanding at end of year | |||||||||
Weighted average grant-date fair value: | |||||||||
Granted | $ | ||||||||
Forfeited | $ | ||||||||
Canceled | $ | ||||||||
Vested | $ | ||||||||
Outstanding at end of year | $ |
2019 | 2018 | 2017 | |||||||
Outstanding at beginning of year | |||||||||
Granted | |||||||||
Forfeited | ( | ) | ( | ) | ( | ) | |||
Vested | ( | ) | ( | ) | ( | ) | |||
Outstanding at end of year | |||||||||
Weighted average grant-date fair value: | |||||||||
Granted | $ | ||||||||
Forfeited | $ | ||||||||
Vested | $ | ||||||||
Outstanding at end of year | $ |
2019 | 2018 | 2017 | |||||||
Outstanding at beginning of year | |||||||||
Granted | |||||||||
Exercised | ( | ) | ( | ) | ( | ) | |||
Expired or forfeited | ( | ) | ( | ) | ( | ) | |||
Outstanding at end of year | |||||||||
Exercisable at end of year | |||||||||
Weighted average exercise price: | |||||||||
Granted | $ | ||||||||
Exercised | $ | ||||||||
Expired or forfeited | $ | ||||||||
Outstanding at end of year | $ | ||||||||
Exercisable at end of year | $ |
2019 | 2018 | 2017 | ||||||
Risk-free interest rate | % | % | % | |||||
Expected dividend yield | % | % | % | |||||
Expected volatility | % | % | % | |||||
Expected option life |
(15) | Pension, Postretirement and Postemployment Benefits |
Pension | Postretirement | ||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Change in Projected Benefit Obligation | |||||||||||||
Projected benefit obligation — beginning | $ | ||||||||||||
Service cost | |||||||||||||
Interest cost | |||||||||||||
Amendment | ( | ) | |||||||||||
Actuarial (gain) loss | ( | ) | ( | ) | |||||||||
Benefits paid | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Expenses paid | ( | ) | ( | ) | |||||||||
Curtailment | ( | ) | |||||||||||
Settlements paid | ( | ) | |||||||||||
Projected benefit obligation — ending | $ | ||||||||||||
Accumulated benefit obligation — ending | $ | ||||||||||||
Change in Plan Assets | |||||||||||||
Fair value of plan assets — beginning | $ | $ | |||||||||||
Actual return on plan assets | ( | ) | |||||||||||
Employer contribution | |||||||||||||
Benefits paid | ( | ) | ( | ) | |||||||||
Expenses paid | ( | ) | ( | ) | |||||||||
Settlements paid | ( | ) | |||||||||||
Transfers | ( | ) | |||||||||||
Fair value of plan assets — ending | $ | ||||||||||||
Reconciliation of Funded Status | |||||||||||||
Projected benefit obligation | $ | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Fair value of plan assets | |||||||||||||
Funded status | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Unrecognized net loss | |||||||||||||
Net amount | $ | ( | ) | ( | ) | ( | ) | ||||||
Accrued liabilities | $ | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Other liabilities | ( | ) | ( | ) | ( | ) | ( | ) | |||||
Accumulated other comprehensive (earnings) loss | |||||||||||||
Net amount | $ | ( | ) | ( | ) | ( | ) |
2019 | 2018 | ||||
Pension | |||||
Weighted average discount rate | % | % | |||
Mortality table | Pri-2012/Scale MP - 2019 | RP-2014/Scale BB | |||
Postretirement | |||||
Discount rate | % | % | |||
Health care cost trend rate assumed for next year | % | % | |||
Rate to which the cost trend rate is assumed to decline (ultimate trend rate) | % | % | |||
Year that the rate reaches the ultimate trend | 2024 | 2024 |
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) | |||||||||
2018 | ||||||||||||
Equity: | ||||||||||||
Other measured at net asset value(a) | $ | |||||||||||
Fixed Income measured at net asset value(a) | ||||||||||||
Cash Equivalents measured as net asset value(a) | ||||||||||||
$ |
(a) | Certain investments that are measured at fair value using the net asset value per share are not classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedule of Changes in Plan Assets disclosed previously in this note. |
2019 | 2018 | 2017 | |||||||
Components of Net Periodic Cost | |||||||||
Pension | |||||||||
Service cost | $ | ||||||||
Interest cost | |||||||||
Expected return on assets | ( | ) | ( | ) | ( | ) | |||
Amortization of prior service cost | ( | ) | |||||||
Amortization of actuarial loss | |||||||||
Curtailment/Settlement losses | |||||||||
Net periodic benefit cost | $ | ||||||||
Postretirement | |||||||||
Service cost | $ | ||||||||
Interest cost | |||||||||
Amortization of actuarial loss | |||||||||
Net periodic benefit cost (income) | $ |
2019 | 2018 | 2017 | ||||||
Pension | ||||||||
Weighted average discount rate | % | % | % | |||||
Long-term rate of return on plan assets | % | % | % | |||||
Postretirement | ||||||||
Discount rate | % | % | % | |||||
Health care cost trend rate assumed for next year | % | % | % | |||||
Rate to which the cost trend rate is assumed to decline (ultimate trend rate) | % | % | % | |||||
Year that the rate reaches the ultimate trend rate | 2024 | 2024 | 2021 |
Pension | Postretirement | |||||
2020 | $ | |||||
2021 | ||||||
2022 | ||||||
2023 | ||||||
2024 | ||||||
2025-2029 |
(16) | Leases |
Year Ended | |||
December 29, 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows from operating leases | $ | ||
Right-of-use assets obtained in exchange for lease obligations: | |||
Operating leases | $ | ||
Weighted Average Remaining Lease Term | |||
Operating leases | |||
Weighted Average Discount Rate | |||
Operating leases | % |
Year Ended | |||
December 29, 2019 | |||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
2025 and thereafter | |||
Total future lease payments | |||
Less imputed interest | |||
Present value of future operating lease payments | |||
Less current portion of operating lease liabilities (1) | |||
Non-current operating lease liability (2) | |||
Operating lease right-of-use assets, net (3) | $ | ||
(1) Included in Accrued liabilities on the consolidated balance sheets | |||
(2) Included in Other liabilities on the consolidated balance sheets | |||
(3) Included in Property, plant and equipment on the consolidated balance sheets |
(17) | Derivative Financial Instruments |
2019 | 2018 | |||||||||||
Notional Amount | Fair Value | Notional Amount | Fair Value | |||||||||
Hedged transaction | ||||||||||||
Inventory purchases | $ | |||||||||||
Sales | ||||||||||||
Royalties and Other | ( | ) | ||||||||||
Total | $ |
2019 | 2018 | |||||
Prepaid expenses and other current assets | ||||||
Unrealized gains | $ | |||||
Unrealized losses | ( | ) | ( | ) | ||
Net unrealized gain | $ | |||||
Other assets | ||||||
Unrealized gains | $ | |||||
Unrealized losses | ( | ) | ||||
Net unrealized gain | $ | |||||
Accrued liabilities | ||||||
Unrealized gains | $ | |||||
Unrealized losses | ( | ) | ( | ) | ||
Net unrealized loss | $ | ( | ) | ( | ) |
2019 | 2018 | 2017 | |||||||
Consolidated Statements of Operations Classification | |||||||||
Cost of sales | $ | ( | ) | ||||||
Sales | |||||||||
Royalties and other | ( | ) | ( | ) | |||||
Net realized gains (losses) | $ | ( | ) |
2019 | 2018 | |||||
Accrued liabilities | ||||||
Unrealized gains | $ | |||||
Unrealized losses | ( | ) | ( | ) | ||
Net unrealized loss | $ | ( | ) | ( | ) | |
Total unrealized losses | $ | ( | ) | ( | ) |
(18) | Acquisition |
Cash Consideration: | |||
To seller(1) | $ | ||
Held in escrow(2) | |||
Market value of stock issued to seller(3) | |||
Deferred purchase price due in January 2019(4) | |||
Acquisition costs | |||
Other adjustment | |||
Total Purchase Price to be allocated | $ |
1. | The Company previously paid Saban Brands $ |
2. | The $ |
3. | The Company issued |
4. | An additional $ |
• | $ |
• | $ |
• | $ |
• | $ |
(19) | Restructuring Actions |
Total expense recorded in 2018 | $ | ||
Payments made in 2018 | ( | ) | |
Remaining amounts to be paid as of December 30, 2018 | |||
Payments made in 2019 | ( | ) | |
Changes in estimates | ( | ) | |
Remaining amounts as of December 29, 2019 | $ |
(20) | Commitments and Contingencies |
(21) | Segment Reporting |
Revenues from External Customers | Affiliate Revenue | Operating Profit (Loss) | Depreciation and Amortization | Capital Additions | Total Assets | |||||||||||||
2019 | ||||||||||||||||||
U.S. and Canada | $ | |||||||||||||||||
International | ||||||||||||||||||
Entertainment, Licensing and Digital | ||||||||||||||||||
Global Operations(a) | ( | ) | ||||||||||||||||
Corporate and eliminations(b) | ( | ) | ( | ) | ||||||||||||||
Consolidated Total | $ | |||||||||||||||||
2018 | ||||||||||||||||||
U.S. and Canada | $ | |||||||||||||||||
International | ||||||||||||||||||
Entertainment, Licensing and Digital | ||||||||||||||||||
Global Operations(a) | ( | ) | ||||||||||||||||
Corporate and eliminations(b) | ( | ) | ( | ) | ( | ) | ||||||||||||
Consolidated Total | $ | |||||||||||||||||
2017 | ||||||||||||||||||
U.S. and Canada | $ | |||||||||||||||||
International | ||||||||||||||||||
Entertainment, Licensing and Digital | ||||||||||||||||||
Global Operations(a) | ||||||||||||||||||
Corporate and eliminations(b) | ( | ) | ( | ) | ( | ) | ||||||||||||
Consolidated Total | $ |
(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. Furthermore, Corporate and eliminations includes elimination of inter-company income statement transactions. Corporate and eliminations also includes the elimination of inter-company balance sheet amounts. |
2019 | 2018 | 2017 | |||||||
Europe | $ | ||||||||
Latin America | |||||||||
Asia Pacific | |||||||||
Net revenues | $ |
2019 | 2018 | 2017 | |||||||
Franchise Brands | $ | ||||||||
Partner Brands | |||||||||
Hasbro Gaming | |||||||||
Emerging Brands | |||||||||
Net revenues | $ |
2019 | 2018 | 2017 | |||||||
Net revenues | |||||||||
United States | $ | ||||||||
International | |||||||||
Long-lived assets | |||||||||
United States | |||||||||
International | |||||||||
$ |
(22) | Subsequent Event - eOne Acquisition |
Acquisition Consideration | |||
eOne common shares outstanding as of December 30, 2019 | |||
Cash consideration per share | $ | ||
Total consideration for shares outstanding | |||
Cash consideration for employee share based payment awards outstanding | |||
Cash consideration for extinguishment of debt | |||
Total cash consideration | |||
Less: Employee awards to be recorded as future stock compensation expense | ( | ) | |
Total consideration transferred | $ |
(23) | Quarterly Financial Data (Unaudited) |
Quarter | |||||||||||||||
First | Second | Third | Fourth | Full Year | |||||||||||
2019 | |||||||||||||||
Net revenues | $ | ||||||||||||||
Operating profit(a) | |||||||||||||||
Earnings before income taxes | |||||||||||||||
Net earnings(a) | |||||||||||||||
Per common share | |||||||||||||||
Net earnings | |||||||||||||||
Basic | $ | ||||||||||||||
Diluted | |||||||||||||||
Market price | |||||||||||||||
High | $ | ||||||||||||||
Low | |||||||||||||||
Cash dividends declared | $ | ||||||||||||||
2018 | |||||||||||||||
Net revenues | $ | ||||||||||||||
Operating profit (loss)(b) | ( | ) | |||||||||||||
Earnings (loss) before income taxes | ( | ) | ( | ) | |||||||||||
Net earnings (loss)(b) | ( | ) | |||||||||||||
Per common share | |||||||||||||||
Net earnings (loss) | |||||||||||||||
Basic | $ | ( | ) | ||||||||||||
Diluted | ( | ) | |||||||||||||
Market price | |||||||||||||||
High | $ | ||||||||||||||
Low | |||||||||||||||
Cash dividends declared | $ |
(a) | Operating profit and net earnings for the 2019 quarters include the impact of the following items: |
• | In the second quarter of 2019, net earnings were impacted by a $ |
• | In the third quarter of 2019, net earnings were impacted by a loss of $ |
• | In fourth quarter of 2019, in association with the Company's agreement to acquire eOne in an all-cash transaction, the Company incurred certain transaction-related costs, as well as hedge gains on the British pound sterling purchase price in 2019. This resulted in eOne net gains in the fourth quarter of 2019 of $ |
◦ | Net earnings were impacted by hedge gains of $ |
◦ | Net earnings were impacted by financing transaction fees of $ |
◦ | Operating profit and net earnings were impacted by eOne Acquisition related costs of $ |
◦ | Net earnings were impacted by tax benefits of $ |
• | In the fourth quarter of 2019, net earnings were impacted by a $ |
(b) | Net earnings (loss) for the 2018 quarters include the impact of the following items: |
• | In the first quarter of 2018, Toys"R"Us announced a liquidation of its U.S. operations, as well as other retail impacts around the globe. As a result, operating profit (loss) and net earnings were impacted by incremental bad debt expense on outstanding Toys"R"Us receivables, royalty expense, inventory obsolescence as well as other related costs of $ |
• | In the first quarter of 2018, operating profit (loss) and net earnings were impacted by $ |
• | In the fourth quarter of 2018, operating profit (loss) and net earnings were impacted by a goodwill impairment charge related to its Backflip business of $ |
• |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
Item 9A. | Controls and Procedures. |
Item 9B. | Other Information. |
Item 10. | Directors, Executive Officers and Corporate Governance. |
Item 11. | Executive Compensation. |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
Item 14. | Principal Accountant Fees and Services. |
Item 15. | Exhibits, Financial Statement Schedules. |
Exhibit | |||
2. | Plan of Acquisition | ||
(a) | |||
3. | Articles of Incorporation and Bylaws | ||
(a) | |||
(b) | |||
(c) | |||
(d) | |||
(e) | |||
(f) | |||
(g) | |||
(h) | |||
(i) | |||
4. | Instruments defining the rights of security holders, including indentures. | ||
(a) | |||
(b) | |||
(c) | |||
(d) | |||
(e) |
Exhibit | |||
(f) | |||
(g) | |||
(h) | |||
(i) | |||
10. | Material Contracts | ||
(a) | |||
(b) | |||
(c) | |||
(d) | |||
(e) | |||
(f) | |||
(g) | |||
(h) | |||
(i) | |||
(j) |
Exhibit | |||
Executive Compensation Plans and Arrangements | |||
(k) | |||
(l) | |||
(m) | |||
(n) | |||
(o) | |||
(p) | |||
(q) | |||
(r) | |||
(s) | |||
(t) | |||
(u) | |||
(v) | |||
(w) | |||
(x) | |||
(y) | |||
(z) |
Exhibit | |||
(aa) | |||
(bb) | |||
(cc) | |||
(dd) | |||
(ee) | |||
(ff) | |||
(gg) | |||
(hh) | |||
(ii) | |||
(jj) | |||
(kk) | |||
(ll) | |||
(mm) | |||
(nn) | |||
(oo) | |||
(pp) | |||
(qq) | |||
(rr) | |||
21. |
Exhibit | |||
23. | |||
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 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 |
* | Furnished herewith. |
Balance at Beginning of Year | Expense (Benefit) | Other Additions | Write-Offs and Other | Balance at End of Year | ||||||||||||
Valuation accounts deducted from assets to which they apply — for doubtful accounts receivable: | ||||||||||||||||
2019 | $ | 9,100 | 5,000 | — | 3,100 | $ | 17,200 | |||||||||
2018 | $ | 31,400 | 57,800 | — | (80,100 | ) | $ | 9,100 | ||||||||
2017 | $ | 16,800 | 23,300 | — | (8,700 | ) | $ | 31,400 |
By: | /s/ Brian D. Goldner | Date: February 27, 2020 | ||
Brian D. Goldner Chairman of the Board and Chief Executive Officer |
Signature | Title | Date | ||
/s/ Brian D. Goldner | Chairman of the Board and Chief Executive Officer (Principal Executive Officer) | February 27, 2020 | ||
Brian D. Goldner | ||||
/s/ Deborah M. Thomas | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | February 27, 2020 | ||
Deborah M. Thomas | ||||
/s/ John A. Frascotti | President and Chief Operating Officer and Director | February 27, 2020 | ||
John A. Frascotti | ||||
/s/ Kenneth A. Bronfin | Director | February 27, 2020 | ||
Kenneth A. Bronfin | ||||
/s/ Michael R. Burns | Director | February 27, 2020 | ||
Michael R. Burns | ||||
/s/ Hope F. Cochran | Director | February 27, 2020 | ||
Hope F. Cochran | ||||
/s/ Sir Crispin H. Davis | Director | February 27, 2020 | ||
Sir Crispin H. Davis | ||||
/s/ Lisa Gersh | Director | February 27, 2020 | ||
Lisa Gersh | ||||
/s/ Alan G. Hassenfeld | Director | February 27, 2020 | ||
Alan G. Hassenfeld | ||||
/s/ Tracy A. Leinbach | Director | February 27, 2020 | ||
Tracy A. Leinbach | ||||
/s/ Edward M. Philip | Director | February 27, 2020 | ||
Edward M. Philip | ||||
/s/ Richard S. Stoddart | Director | February 27, 2020 | ||
Richard S. Stoddart | ||||
Director | February 27, 2020 | |||
Mary Beth West | ||||
/s/ Linda K. Zecher | Director | February 27, 2020 | ||
Linda K. Zecher |
• | an 80% vote of all outstanding shares entitled to vote, including a majority vote of all disinterested shareholders; |
• | the approval of a majority of the entire Board of Directors, including the affirmative vote of a majority of the “Continuing Directors,” as defined in our restated articles of incorporation; and |
• | the satisfaction of procedural requirements, which are intended to assure that shareholders are treated fairly under the circumstances. |
• | any person together with its “Affiliates” and “Associates,” as defined in the Exchange Act, and any person acting in concert therewith who is the beneficial owner, directly or indirectly, of 10% or more of the votes held by the holders of the securities generally entitled to vote for directors (the “Voting Stock”), |
• | any Affiliate or Associate of an Interested Person, including without limitation, a Person acting in concert therewith, |
• | any person that at any time within the two year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 10% or more of the votes held by the holders of shares of Voting Stock; or |
• | an assignee of, or successor to, any shares of Voting Stock which were at any time within the two year period prior to the date in question beneficially owned by any Interested Person, if such assignment or succession occurred in a transaction or series of transactions not involving a public offering as defined by the Securities Act. |
• | an assignee of, or successor to, any shares of Voting Stock which were at any time within the two year period prior to the date in question beneficially owned by any Interested Person, if such assignment or succession occurred in a transaction or series of transactions not involving a public offering as defined by the Securities Act. |
I. | Brian Goldner, certify that: |
1. | I have reviewed this annual report on Form 10-K of Hasbro, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Brian Goldner | |
Brian Goldner Chairman and Chief Executive Officer |
I, | Deborah Thomas, certify that: |
1. | I have reviewed this annual report on Form 10-K of Hasbro, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Deborah Thomas | |
Deborah Thomas Executive Vice President and Chief Financial Officer |
1) | the Company’s Annual Report on Form 10-K for the year ended December 29, 2019, as filed with the Securities and Exchange Commission (the “10-K Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2) | the information contained in the Company’s 10-K Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Brian Goldner | |
Brian Goldner Chairman and Chief Executive Officer of Hasbro, Inc. |
1) | the Company’s Annual Report on Form 10-K for the year ended December 29, 2019, as filed with the Securities and Exchange Commission (the “10-K Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2) | the information contained in the Company’s 10-K Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Deborah Thomas | |
Deborah Thomas Executive Vice President and Chief Financial Officer of Hasbro, Inc. |
Quarterly Financial Data (Unaudited – see accompanying accountants’ report) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Data (Unaudited – see accompanying accountants’ report) | Quarterly Financial Data (Unaudited)
• Throughout 2018, net earnings was impacted by adjustments to provisional U.S. Tax Reform amounts recorded in the fourth quarter of 2017 based on additional regulations issued, amounting to charges of $47,790 the first quarter of 2018, a benefit of $17,336 in the third quarter of 2018 and charges of $10,196 the fourth quarter of 2018.
|
Acquisition |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition | Acquisition During October 2019, the Company acquired Tuque Games ("Tuque"), an independent digital game development studio based in Montreal, Canada for a purchase price of $8,761, net of cash acquired. Tuque is included as part of the Company's Entertainment, Licensing and Digital segment and will focus on the development of digital games for Hasbro brands including DUNGEONS & DRAGONS. The initial accounting allocation of the consideration transferred may be modified during the period through September 27, 2020. On June 12, 2018, the Company completed the acquisition of Saban Properties’ POWER RANGERS and other Entertainment Assets. The Company accounted for the acquisition as an asset acquisition based on the guidance in ASU 2017-1, which uses the cost accumulation and allocation method. As such, the Company included acquisition costs in its calculation of the purchase price to be allocated to the assets acquired. The total purchase price for the assets was $535,850, consisting of the following:
The total purchase price was allocated on a relative fair value basis as follows:
• $6,729 as other current liabilities.
|
Stock Options, Other Stock Awards and Warrants |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options, Other Stock Awards and Warrants | Stock Options, Other Stock Awards and Warrants The Company has reserved 7,503 shares of its common stock for issuance upon exercise of options and other awards granted or to be granted under stock incentive plans for employees and for non-employee members of the Board of Directors (collectively, the “plans”). These awards generally vest and are expensed in equal annual amounts over three to five years. The plans provide that options be granted at exercise prices not less than the market value of the underlying common stock on the date the option is granted and options and share awards are adjusted for such changes as stock splits and stock dividends. Options are exercisable for periods of no more than seven years after date of grant. Upon exercise in the case of stock options, grant in the case of restricted stock or vesting in the case of performance based contingent stock and restricted stock unit grants, shares are issued out of available treasury shares. The Company’s current plan permits the granting of awards in the form of stock, stock appreciation rights, stock awards and cash awards in addition to stock options. Total compensation expense related to stock options, restricted stock units, including those awards made to non-employee members of its Board of Directors, and stock performance awards for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 was $28,044, $27,892 and $56,032, respectively, and was recorded as follows:
The following table represents total stock compensation expense, net of performance adjustments, by award type related to stock performance awards, restricted stock units, stock options and awards made to non-employee members of the Company’s Board of Directors, for the years ended December 29, 2019, December 30, 2018 and December 31, 2017:
Stock Performance Awards In 2019, 2018 and 2017, as part of its annual equity grant to executive officers and certain other employees, the Company issued contingent stock performance awards (the “Stock Performance Awards”). These awards provide the recipients with the ability to earn shares of the Company’s common stock based on the Company’s achievement of stated cumulative operating performance targets over the three fiscal years ended December 2021, December 2020, and December 2019 for the 2019, 2018 and 2017 awards, respectively. Each Stock Performance Award has a target number of shares of common stock associated with such award which may be earned by the recipient if the Company achieves the stated diluted earnings per share and revenue targets. For certain employees, the Stock Performance Awards also include an additional return on invested capital target in addition to the diluted earnings per share and revenue targets. The ultimate amount of the award may vary from 0% to 200% of the target number of shares, depending on the cumulative results achieved. Information with respect to Stock Performance Awards for 2019, 2018 and 2017 is as follows:
Shares canceled in 2019 represent Stock Performance Awards granted during 2017 that were canceled based on the failure to meet the targets set forth by the agreement. Shares granted in 2018 included 14 additional shares related to the 2016 award, reflecting increases in the ultimate amount of shares to be issued based on the Company's cumulative results achieved during the performance period. Shares granted in 2017 included 227 additional shares related to the 2015 award. These shares were excluded from the calculation of the weighted average grant-date fair value of Stock Performance awards granted in 2018 and 2017. Stock Performance Awards are valued at the market value of the underlying common stock at the dates of grant and are expensed over the performance period. On a periodic basis, the Company reviews the actual and forecasted performance of the Company against the stated targets for each award. The total expense is adjusted upward or downward based on the expected amount of shares to be issued as defined in the respective stock performance award agreement. If minimum targets as detailed under the award are not met, no additional compensation expense will be recognized and any previously recognized compensation expense will be reversed. During 2019, it was determined that it was no longer probable that targets would be met for certain Stock Performance Awards and, as a result, a portion of the previously recognized expense related to those awards was reversed. During 2019, 2018 and 2017, the Company recognized expense, net of performance adjustments, of $(1,573), $842 and $27,522, respectively, relating to Stock Performance Awards. At December 29, 2019, the amount of total unrecognized compensation cost related to these awards is approximately $16,655 and the weighted average period over which this will be expensed is 24 months. Restricted Stock Units The Company, as part of its annual equity grant to executive officers and certain other employees, issues restricted stock or grants restricted stock units. These shares or units are nontransferable and subject to forfeiture for periods prescribed by the Company. These awards are valued at the market value of the underlying common stock at the date of grant and are subsequently amortized over the periods during which the restrictions lapse, generally three years. During 2019, 2018 and 2017, the Company recognized compensation expense, net of forfeitures, on these awards of $18,744, $17,897 and $20,573, respectively. At December 29, 2019, the amount of total unrecognized compensation cost related to restricted stock units is $25,148 and the weighted average period over which this will be expensed is 22 months. In October 2012, as part of an Amended and Restated Employment Agreement, (the “Agreement”), the Company’s Chief Executive Officer was awarded 587 shares to be granted in two tranches across 2013 and 2014, which were expensed from 2013 through 2018. These awards provided the recipient with the ability to earn shares of the Company’s common stock based on the Company’s achievement of four stated stock price hurdles and continued employment through December 30, 2018. In August 2014, the Agreement was further amended to include additional requirements. Specifically, if the third and fourth stock price hurdles were achieved, the number of shares ultimately issued was dependent on the average stock price for the thirty day period immediately prior to December 30, 2018. This amendment did not result in any incremental fair value to the award which was used to record compensation expense for the award. At December 30, 2018, all requirements of the Agreement were met and 587 shares were issued. Excluding the aforementioned award for 587 shares, information with respect to the remaining Restricted Stock Awards and Restricted Stock Units for 2019, 2018 and 2017 is as follows:
Stock Options Information with respect to stock options for each of the three fiscal years ended December 29, 2019 is as follows:
With respect to the 2,444 outstanding options and 1,284 options exercisable at December 29, 2019, the weighted average remaining contractual life of these options was 4.18 years and 2.83 years, respectively. The aggregate intrinsic value of the options outstanding and exercisable at December 29, 2019 was $59,090 and $42,008, respectively. Substantially all unvested outstanding options are expected to vest. The Company uses the Black-Scholes valuation model in determining the fair value of stock options. The expected life of the options used in this calculation is the period of time the options are expected to be outstanding and has been determined based on historical exercise experience. The weighted average fair value of options granted in fiscal 2019, 2018 and 2017 was $15.70, $19.26 and $18.25, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the fiscal years 2019, 2018 and 2017:
The intrinsic values, which represent the difference between the fair market value on the date of exercise and the exercise price of the option, of the options exercised in fiscal 2019, 2018 and 2017 were $24,483, $38,909 and $31,406, respectively. At December 29, 2019, the amount of total unrecognized compensation cost related to stock options was $11,691 and the weighted average period over which this will be expensed is 22 months. Non-Employee Awards In 2019, 2018 and 2017, the Company granted 18, 20 and 16 shares of common stock, respectively, to its non-employee members of its Board of Directors. Of these shares, the receipt of 10 shares from the 2019 grant, 11 shares from the 2018 grant and 10 shares from the 2017 grant has been deferred to the date upon which the respective director ceases to be a member of the Company’s Board of Directors. These awards were valued at the market value of the underlying common stock at the date of grant and vested upon grant. In connection with these grants, compensation cost of $1,760 was recorded in selling, distribution and administration expense in the year ended December 29, 2019, $1,760 in the year ended December 30, 2018 and $1,595 in the year ended December 31, 2017.
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Derivative Financial Instruments - Fair Value of Undesignated Derivate Financial Instruments (Details) - USD ($) $ in Thousands |
Dec. 29, 2019 |
Dec. 30, 2018 |
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Not designated as hedging instrument | Accrued liabilities | ||
Derivative [Line Items] | ||
Unrealized gains | $ 13 | $ 1,269 |
Unrealized losses | (3,820) | (2,820) |
Net unrealized gain (loss) | (3,807) | (1,551) |
Designated as hedging instrument | Foreign exchange forward | ||
Derivative [Line Items] | ||
Net unrealized gain (loss) | (3,807) | (1,551) |
Designated as hedging instrument | Accrued liabilities | ||
Derivative [Line Items] | ||
Unrealized gains | 293 | 77 |
Unrealized losses | (2,219) | (136) |
Net unrealized gain (loss) | $ (1,926) | $ (59) |
Derivative Financial Instruments - Cash Flow Hedging Instruments (Details) - Designated as hedging instrument - Cash flow hedging - USD ($) $ in Thousands |
Dec. 29, 2019 |
Dec. 30, 2018 |
---|---|---|
Derivative [Line Items] | ||
Fair Value | $ 12,904 | $ 26,017 |
Derivative, notional amount | 543,219 | 792,840 |
Inventory purchases | ||
Derivative [Line Items] | ||
Fair Value | 8,727 | 15,089 |
Derivative, notional amount | 398,800 | 468,305 |
Sales | ||
Derivative [Line Items] | ||
Fair Value | 4,037 | 11,232 |
Derivative, notional amount | 124,920 | 298,194 |
Royalties and Other | ||
Derivative [Line Items] | ||
Fair Value | 140 | (304) |
Derivative, notional amount | $ 19,499 | $ 26,341 |
Fair Value of Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Hierarchy | At December 29, 2019 and December 30, 2018, 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):
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Reconciliation of Level 3 Fair Value | 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):
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Segment Reporting - Net Revenues by Product Category (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
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Dec. 29, 2019 |
Sep. 29, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 30, 2018 |
Sep. 30, 2018 |
Jul. 01, 2018 |
Apr. 01, 2018 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Revenue from External Customer [Line Items] | |||||||||||
Net revenues | $ 1,428,007 | $ 1,575,173 | $ 984,537 | $ 732,510 | $ 1,389,161 | $ 1,569,686 | $ 904,458 | $ 716,341 | $ 4,720,227 | $ 4,579,646 | $ 5,209,782 |
Franchise Brands | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenues | 2,411,847 | 2,445,902 | 2,690,394 | ||||||||
Partner Brands | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenues | 1,220,982 | 987,283 | 1,271,597 | ||||||||
Hasbro Gaming | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenues | 709,750 | 787,692 | 893,019 | ||||||||
Emerging Brands | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenues | $ 377,648 | $ 358,769 | $ 354,772 |
Restructuring Actions (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Apr. 01, 2018 |
Dec. 29, 2019 |
Dec. 30, 2018 |
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Restructuring Charges [Abstract] | |||||
Severance charges | $ 72,000 | $ 72,000 | $ 17,349 | $ 69,192 | $ 89,349 |
Payments made in 2018 | (35,481) | $ (20,157) | (35,481) | $ (20,157) | |
Changes in estimates | (2,598) | ||||
Payments made in 2019 | $ 31,113 | $ 31,113 |
Derivative Financial Instruments (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 29, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cash Flow Hedging Instruments | At December 29, 2019 and December 30, 2018, the notional amounts and fair values of assets (liabilities) for the Company’s foreign currency forward contracts designated as cash flow hedging instruments were as follows:
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Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location | The fair values of the Company’s foreign currency forward contracts designated as cash flow hedges are recorded in the consolidated balance sheet at December 29, 2019 and December 30, 2018 as follows:
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Operations | Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings to net earnings for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 as follows:
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Fair Values of Undesignated Derivative Financial Instruments | At December 29, 2019 and December 30, 2018, the fair value of the Company’s undesignated derivative financial instruments are recorded in the consolidated balance sheets as follows:
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Quarterly Financial Data (Unaudited – see accompanying accountants’ report) - Additional Information (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 |
Sep. 29, 2019 |
Jun. 30, 2019 |
Dec. 30, 2018 |
Sep. 30, 2018 |
Apr. 01, 2018 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Quarterly Financial Data [Line Items] | |||||||||
Settlement of U.S. defined benefit plan, before tax | $ 185,000 | $ 110,777,000 | |||||||
Settlement of U.S. defined benefit plan | 143,000 | $ 85,852,000 | $ 85,995,000 | $ 0 | $ 0 | ||||
Gain on acquisition | 101,249,000 | ||||||||
Gain on acquisition, net | 102,658,000 | ||||||||
Deferred financing fees paid | (20,568,000) | (26,653,000) | 0 | 0 | |||||
Transaction costs, tax expense (benefit) | 1,409,000 | ||||||||
Bad debt expense | $ (10,068,000) | $ 70,428,000 | 49,000,000 | 18,000,000 | |||||
Bad debt expense, net | (8,543,000) | 61,372,000 | |||||||
Severance charges | 72,000,000 | 72,000,000 | 17,349,000 | 69,192,000 | 89,349,000 | ||||
Severance charges, net | 62,249,000 | 15,699,000 | |||||||
Impairment of goodwill | 86,253,000 | 0 | 86,253,000 | 0 | |||||
Impairment of intangible assets | 0 | 31,303,000 | 0 | $ 31,303,000 | $ 0 | ||||
Goodwill and intangible asset impairment | 96,928,000 | ||||||||
Tax Act, expense (benefit) | $ (10,196,000) | $ 17,336,000 | $ (47,790,000) | ||||||
eOne Acquisition | |||||||||
Quarterly Financial Data [Line Items] | |||||||||
Acquisition costs | 17,778,000 | 17,778,000 | |||||||
Other Operating Income (Expense) | Not designated as hedging instrument | Foreign exchange contract | eOne Acquisition | |||||||||
Quarterly Financial Data [Line Items] | |||||||||
Other (income) expense | $ 139,666,000 | $ 25,533,000 | $ (79,990,000) | ||||||
Gain (loss) on derivative, net | $ 20,886,000 |
Quarterly Financial Data (Unaudited – see accompanying accountants’ report) (Tables) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information |
• Throughout 2018, net earnings was impacted by adjustments to provisional U.S. Tax Reform amounts recorded in the fourth quarter of 2017 based on additional regulations issued, amounting to charges of $47,790 the first quarter of 2018, a benefit of $17,336 in the third quarter of 2018 and charges of $10,196 the fourth quarter of
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Income Taxes - Deferred Tax Assets and Liabilities by Balance Sheet Location (Details) - USD ($) $ in Thousands |
Dec. 29, 2019 |
Dec. 30, 2018 |
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Income Tax Disclosure [Abstract] | ||
Other assets | $ 92,401 | $ 174,077 |
Other liabilities | (2,606) | (5,910) |
Net deferred income taxes | $ 89,795 | $ 168,167 |
Stock Options, Other Stock Awards and Warrants - Schedule of Share-based Payment Award (Details) - Share-based Payment Arrangement, Option |
12 Months Ended | ||
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Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | 2.47% | 2.57% | 1.85% |
Expected dividend yield | 3.14% | 2.57% | 2.31% |
Expected volatility | 27.00% | 27.00% | 24.00% |
Expected option life (in years) | 4 years | 4 years | 5 years |
Goodwill and Intangibles - Schedule of Other Intangibles (Details) - USD ($) $ in Thousands |
Dec. 29, 2019 |
Dec. 30, 2018 |
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Summary of Other Intangible Assets [Abstract] | ||
Acquired product rights | $ 1,309,082 | $ 1,309,344 |
Licensed rights of entertainment properties | 30,501 | 30,501 |
Accumulated amortization | (769,016) | (721,741) |
Amortizable intangible assets | 570,567 | 618,104 |
Product rights with indefinite lives | 75,738 | 75,738 |
Total other intangibles assets, net | $ 646,305 | $ 693,842 |
Revenue Recognition (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
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Dec. 30, 2018
USD ($)
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Apr. 01, 2018
USD ($)
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Dec. 29, 2019
USD ($)
brand_category
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Dec. 30, 2018
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Dec. 31, 2017
USD ($)
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Contract with customer, asset | $ 18,166 | $ 46,959 | $ 18,166 | ||
Contract with customer, asset, net, current | 12,895 | 32,182 | 12,895 | ||
Contract with customer, asset, net, noncurrent | 5,271 | $ 14,777 | 5,271 | ||
Bad debt expense | (10,068) | $ 70,428 | 49,000 | $ 18,000 | |
Number of brand categories | brand_category | 4 | ||||
Accounting standards update 2014-09 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Deferred revenues recorded as liabilities | $ 50,759 | $ 46,766 | $ 50,759 |
Subsequent Event |
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Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||
Subsequent Events [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Subsequent Events | Subsequent Event - eOne Acquisition 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. We believe the addition of eOne accelerates our 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 enhancing brand building capabilities and our storytelling capabilities to strengthen Hasbro brands. The all-cash transaction was valued at approximately £2,900,000 based on the consideration of £5.60 per common share of eOne. Converted at a rate of $1.31 USD/GBP on December 30, 2019, the cash consideration for shares outstanding was approximately $3,656,000. The Company also redeemed eOne's outstanding senior secured notes and paid off the debt outstanding under eOne's revolving credit facility, which together represent approximately $832,000 of eOne's indebtedness. The total cash consideration transferred by the Company was approximately $4,629,000.
Because the £5.60 per share consideration is denominated in a currency other than the Company’s functional currency, the consideration was revalued on December 30, 2019, the closing date of the Acquisition, at the then-current GBP/USD spot rate. 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, (2) the issuance of 10,592 shares of common stock at a public offering price of $95.00 per share and (3) $1,000,000 in term loans provided by a Term Loan Agreement, which were borrowed on the date of closing. Due to the limited time since the date of the acquisition, the Company's initial purchase price accounting for the eOne acquisition is incomplete and remains under review by the Company. As a result, we are unable to make disclosures required for business combinations related to pro forma revenue and earnings for the periods presented herein. In addition, as information regarding the assets and liabilities acquired as of December 30, 2019, is similarly not yet available in its entirety, we are unable to make disclosures for such assets and liabilities, and contingencies acquired or other acquisition date fair value disclosures. This information may be modified through December 27, 2020, as more information is obtained about the facts and circumstances existing at the acquisition date.
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Property, Plant and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Property, Plant and Equipment |
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Long-Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Components of long-term debt for the fiscal years ended on December 29, 2019 and December 30, 2018 are as follows:
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Long-Term Debt |
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Long-Term Debt | Long-Term Debt Components of long-term debt for the fiscal years ended on December 29, 2019 and December 30, 2018 are as follows:
In November of 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 an accrued and unpaid interest. In September 2017, the Company issued $500,000 of notes due 2027 (the "2027 Notes") that bear interest at a fixed rate of 3.50%. Net proceeds from the issuance of the 2027 Notes, after deduction of $6,122 of underwriting discount and debt issuance expenses, totaled $493,878. These costs are being amortized over the life of the 3.50% Notes, or 10 years. The Company may redeem the 2027 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 25 basis points. In addition, three months prior to their maturity date, the Company may redeem at its option the 2027 Notes, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount of the 2027 Notes to be redeemed. The proceeds from this debt issuance were used to repay the $350,000 aggregate principal amount of its 6.30% Notes that matured during the third quarter of 2017. The Company used the remaining net proceeds for general corporate purposes. The Company may redeem the notes due in 2021 (the "2021 Notes") and 2044 (the "2044 Notes") at its option at the greater of the principal amount of the notes or the present value of the remaining scheduled payments discounted using the effective interest rate on applicable U.S. Treasury bills at the time of repurchase. Prior to the issuance of these notes, the Company held forward-starting interest rate swap contracts to hedge the variability in the anticipated underlying U.S. Treasury interest rate associated with the expected issuance of the 2021 Notes and 2044 Notes. At the date of issuance, these contracts were terminated and the Company paid $33,306, the fair value of the contracts on that date, to settle. Of this amount, $6,373 related to the 2021 Notes and $26,933 related to the 2044 Notes has been deferred in AOCE and is being amortized to interest expense over the life of the respective notes using the effective interest rate method. The fair values of the Company’s long-term debt are considered Level 3 fair values (see note 13 for further discussion of the fair value hierarchy) and are measured using the discounted future cash flows method. In addition to the debt terms, the valuation methodology includes an assumption of a discount rate that approximates the current yield on a similar debt security. This assumption is considered an unobservable input in that it reflects the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability. The Company believes that this is the best information available for use in the fair value measurement. At December 29, 2019, as detailed above, the Company's long-term borrowings have contractual maturities of $300,000 in 2021 and 2022, respectively, and $500,000 in 2024. The aggregate principal amount of long-term debt maturing in years subsequent to 2024 is $2,984,895.
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Equity Method Investment |
12 Months Ended |
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Dec. 29, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investment | Equity Method Investment The Company owns an interest in a joint venture, Discovery Family Channel (the “Network”), with Discovery Communications, Inc. (“Discovery”). The Company has determined that it does not meet the control requirements to consolidate the Network and accounts for the investment using the equity method of accounting. The Network was established to create a cable television network in the United States dedicated to high-quality children’s and family entertainment. In October 2009, the Company purchased an initial 50% share in the Network for a payment of $300,000 and certain future tax payments based on the value of certain tax benefits expected to be received by the Company. On September 23, 2014, the Company and Discovery amended their relationship with respect to the Network and Discovery increased its equity interest in the Network to 60% while the Company retained a 40% equity interest in the Network. In connection with the amendment, the Company and Discovery entered into an option agreement related to the Company’s remaining 40% ownership in the Network, exercisable during the one-year period following December 31, 2021. The exercise price of the option agreement is based upon 80% of the then fair market value of the Network, subject to a fair market value floor. At December 29, 2019 and December 30, 2018, the fair market value of this option was $22,145 and $23,440, respectively, and was included as a component of other liabilities. During 2019, 2018 and 2017, the Company recorded (gains) losses of $1,295, $(540) and $(4,790) in other (income) expense, net relating to the change in fair value of this option. The Company also has a related liability due to Discovery under the existing tax sharing agreement. The balance of the associated liability, including imputed interest, was $22,755 and $25,289 at December 29, 2019 and December 30, 2018, respectively, and is included as a component of other liabilities in the accompanying consolidated balance sheets. The Company recognized a gain of $19,911 in the fourth quarter of 2017 related to a reduction of this liability due to the reduction of the future payments under the agreement as a result of U.S. tax reform passed in December 2017. During 2019, 2018 and 2017, the Company made payments under the tax sharing agreement to Discovery of $4,760, $7,087 and $6,785, respectively. The Company has a license agreement with the Network that requires the payment of royalties by the Company to the Network based on a percentage of revenue derived from products related to television shows broadcast by the joint venture. The license includes a minimum royalty guarantee of $125,000, which was paid in five annual installments of $25,000 per year, commencing in 2009, which can be earned out over approximately a 12-year period. As of December 29, 2019 and December 30, 2018, the Company had $26,941 and $41,041, respectively, of prepaid royalties related to this agreement, $12,236 and $13,216, respectively, of which are included in prepaid expenses and other current assets and $14,705 and $27,825, respectively, of which are included in other assets. The Company and the Network are also parties to an agreement under which the Company will provide the Network with an exclusive first look in the U.S. to license certain types of programming developed by the Company based on its intellectual property. In the event the Network licenses the programming from the Company to air, it is required to pay the Company a license fee. As of December 29, 2019 and December 30, 2018 the Company’s investment in the Network totaled $223,769 and $236,934, respectively. The Company’s share in the earnings of the Network for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 totaled $23,642, $21,145 and $23,270, respectively, and is included as a component of other (income) expense, net in the consolidated statements of operations. The Company also enters into certain other transactions with the Network including the licensing of television programming and the purchase of advertising. During 2019, 2018 and 2017, these transactions were not material.
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Income Taxes - Unrecognized Tax Benefits Roll Forward (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance at beginning of year | $ 46,074 | $ 84,244 | $ 80,388 |
Gross increases in prior period tax positions | 2,031 | 4,449 | 2,518 |
Gross decreases in prior period tax positions | 0 | (55,752) | (28,653) |
Gross increases in current period tax positions | 4,152 | 16,987 | 34,056 |
Decreases related to settlements with tax authorities | (12,037) | (1,102) | (1,375) |
Decreases from the expiration of statute of limitations | (3,569) | (2,752) | (2,690) |
Balance at end of year | $ 36,651 | $ 46,074 | $ 84,244 |
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Pension, Postretirement and Postemployment Benefits - Components of Net Periodic Benefit Cost (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Pension | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Service cost | $ 1,168,000 | $ 1,300,000 | $ 1,290,000 |
Interest cost | 6,624,000 | 13,358,000 | 15,303,000 |
Expected return on assets | (6,163,000) | (18,475,000) | (19,534,000) |
Amortization of prior service cost | (11,000) | 0 | 0 |
Curtailment/Settlement losses | 7,578,000 | 10,995,000 | 9,082,000 |
Curtailment/Settlement losses | 110,962,000 | 0 | 0 |
Net periodic benefit cost (income) | 120,158,000 | 7,178,000 | 6,141,000 |
Postretirement | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Service cost | 888,000 | 756,000 | 691,000 |
Interest cost | 1,267,000 | 1,171,000 | 1,179,000 |
Curtailment/Settlement losses | 21,000 | 165,000 | 0 |
Net periodic benefit cost (income) | $ 2,176,000 | $ 2,092,000 | $ 1,870,000 |
Fair Value of Financial Instruments - Reconciliation of Level 3 Fair Value (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
|
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Balance at beginning of year | $ (23,440) | $ (23,980) |
Net gains from change in fair value | 1,295 | 540 |
Balance at end of year | $ (22,145) | $ (23,440) |
Subsequent Event - Schedule of Business Acquisition (Details) - Dec. 30, 2019 - Subsequent Event - eOne Acquisition £ / shares in Units, $ / shares in Units, £ in Thousands, shares in Thousands, $ in Thousands |
USD ($)
$ / shares
shares
|
GBP (£)
shares
|
£ / shares |
---|---|---|---|
Subsequent Event [Line Items] | |||
eOne common shares outstanding | shares | 498,040 | 498,040 | |
Cash consideration per share | (per share) | $ 7.34 | £ 5.60 | |
Total cash consideration | $ 4,628,502 | £ 2,900,000 | |
Less: Employee awards to be recorded as future stock compensation expense | (41,863) | ||
Total purchase price to be allocated | 4,586,639 | ||
Cash consideration for employee share based payment awards outstanding | 3,655,614 | ||
Payments to Acquire Businesses, Gross, Employee Share Based Payment Awards Outstanding | 141,286 | ||
Distributions on mandatorily redeemable securities | $ 831,602 |
Summary of Significant Accounting Policies - Schedule of Earnings per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 |
Sep. 29, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 30, 2018 |
Sep. 30, 2018 |
Jul. 01, 2018 |
Apr. 01, 2018 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Net earnings (loss) | |||||||||||
Net earnings attributable to Hasbro, Inc. | $ 267,345 | $ 212,949 | $ 13,433 | $ 26,727 | $ 8,766 | $ 263,861 | $ 60,299 | $ (112,492) | $ 520,454 | $ 220,434 | $ 396,607 |
Average shares outstanding, basic and diluted (in shares) | 127,896 | 126,132 | 125,039 | ||||||||
Earnings Per Share, Basic [Abstract] | |||||||||||
Equivalent shares (in shares) | 127,896 | 126,132 | 125,039 | ||||||||
Net earnings attributable to Hasbro, Inc. (in dollars per share) | $ 2.02 | $ 1.68 | $ 0.11 | $ 0.21 | $ 0.07 | $ 2.08 | $ 0.48 | $ (0.90) | $ 4.07 | $ 1.75 | $ 3.17 |
Effect of dilutive securities: | |||||||||||
Options and other share-based awards (in shares) | 603 | 758 | 1,992 | ||||||||
Equivalent shares (in shares) | 128,499 | 126,890 | 127,031 | ||||||||
Net earnings attributable to Hasbro, Inc. (in dollars per share) | $ 2.01 | $ 1.67 | $ 0.11 | $ 0.21 | $ 0.07 | $ 2.06 | $ 0.48 | $ (0.90) | $ 4.05 | $ 1.74 | $ 3.12 |
Goodwill and Intangibles - Narrative (Details) - USD ($) |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill | $ 9,117,000 | ||||
Terminal value growth rate, income approach, backflip | 3.00% | 3.00% | |||
Discount rate, income approach, goodwill impairment analysis, backflip | 19.00% | 19.00% | |||
Impairment of goodwill | $ 86,253,000 | $ 0 | $ 86,253,000 | $ 0 | |
Impairment of intangible assets | $ 0 | $ 31,303,000 | 0 | 31,303,000 | $ 0 |
Entertainment, Licensing and Digital | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill | 9,117,000 | ||||
Impairment of goodwill | (5,401,000) | $ 86,253,000 | |||
Tuque Games | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill | $ 9,117,000 |
Label | Element | Value |
---|---|---|
Accounting Standards Update 2018-02 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 21,503,000 |
Accounting Standards Update 2018-02 [Member] | Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 0 |
Accounting Standards Update 2018-02 [Member] | AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (21,503,000) |
Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 29, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Earnings Before Income Taxes, Determined by Tax Jurisdiction | The components of earnings before income taxes, determined by tax jurisdiction, are as follows:
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Schedule of Income Taxes Attributable to Earnings Before Income Taxes | Income taxes attributable to earnings before income taxes are:
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Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the statutory United States federal income tax rate to Hasbro’s effective income tax rate is as follows:
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Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 29, 2019 and December 30, 2018 are:
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Schedule of Deferred Tax Assets and Liabilities by Balance Sheet Location | At December 29, 2019 and December 30, 2018, the Company’s net deferred income taxes are recorded in the consolidated balance sheets as follows:
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Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of unrecognized tax benefits, excluding potential interest and penalties, for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017 is as follows:
|
Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
---|---|
Dec. 29, 2019 | |
Accounting Policies [Abstract] | |
Preparation of Consolidated Financial Statements | The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and notes thereto. Actual results could differ from those estimates.
|
Principles of Consolidation | The consolidated financial statements include the accounts of Hasbro, Inc. and all majority-owned subsidiaries (“Hasbro” or the “Company”). Investments representing 20% to 50% ownership interests in other companies are accounted for using the equity method. For those majority-owned subsidiaries that are not 100% owned by Hasbro, the interests of the minority owners are accounted for as noncontrolling interests |
Fiscal Year | Hasbro’s fiscal year ends on the last Sunday in December. The fiscal years ended December 29, 2019 and December 30, 2018 were fifty-two week periods while the year ended December 31, 2017 was a fifty-three week period.
|
Cash and Cash Equivalents | Cash and cash equivalents include all cash balances and highly liquid investments purchased with an initial maturity to the Company of three months or less.
|
Marketable Securities | Included in marketable securities are investments in private investment funds. These investments are included in prepaid expenses and other current assets in the accompanying consolidated balance sheets, and, due to the nature and business purpose of these investments, the Company has selected the fair value option which requires the Company to record the unrealized gains and losses on these investments in the consolidated statements of operations at the time they occur. Marketable securities also include common stock in a public company arising from a business relationship. This type of investment is also included in prepaid expenses and other current assets in the accompanying consolidated balance sheets; however, due to its nature and business purpose, the Company records unrealized gains and losses in accumulated other comprehensive loss in the consolidated balance sheets until it is sold or the decline in value is deemed to be other than temporary, at which point the gains or losses will be recognized in the consolidated statements of operations.
|
Accounts Receivable and Allowance for Doubtful Accounts | Credit is granted to customers predominantly on an unsecured basis. Credit limits and payment terms are established based on extensive evaluations made on an ongoing basis throughout the fiscal year with regard to the financial performance, cash generation, financing availability and liquidity status of each customer. The majority of customers are formally reviewed at least annually; more frequent reviews are performed based on the customer’s financial condition and the level of credit being extended. For customers on credit who are experiencing financial difficulties, management performs additional financial analyses before shipping orders. The Company uses a variety of financial transactions, based on availability and cost, to increase the collectability of certain of its accounts, including letters of credit, credit insurance, and requiring cash in advance of shipping. The Company records an allowance for doubtful accounts based on management’s assessment of the business environment, customers’ financial condition, historical collection experience, accounts receivable aging and customer disputes. Accounts receivable, net on the consolidated balance sheet represents amounts due from customers less the allowance for doubtful accounts as well as allowances for discounts, rebates and returns. In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (ASU 2016-13) Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments. The amendments in this update provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The standard update replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company has evaluated the requirements of ASU 2016-13 and currently does not expect the standard to have a material impact on its consolidated financial statements.
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Inventories | Inventories are valued at the lower of cost (first-in, first-out) or net realizable value. Based upon a consideration of quantities on hand, actual and projected sales volume, anticipated product selling price and product lines planned to be discontinued, slow-moving and obsolete inventory is written down to its estimated net realizable value. |
Equity Method Investment | For the Company’s equity method investments, only the Company’s investment in and amounts due to and from the equity method investment are included in the consolidated balance sheets and only the Company’s share of the equity method investment’s earnings (losses) is included in other (income) expense, net in the consolidated statements of operations. Dividends, cash distributions, loans or other cash received from the equity method investment, additional cash investments, loan repayments or other cash paid to the investee are included in the consolidated statements of cash flows. The Company reviews its equity method investments for impairment on a periodic basis. If it has been determined that the fair value of the equity investment is less than its related carrying value and that this decline is other-than-temporary, the carrying value of the investment is adjusted downward to reflect these declines in value. The Company has one significant equity method investment, its 40% interest in a joint venture with Discovery Communications, Inc. (“Discovery”). The Company and Discovery are party to an option agreement with respect to this joint venture. The Company has recorded a liability for this option agreement at fair value which is included in other liabilities in the consolidated balance sheets. Unrealized gains and losses on this option are recognized in the consolidated statements of operations as they occur.
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Property, Plant and Equipment, Net | Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using accelerated and straight-line methods to depreciate the cost of property, plant and equipment over their estimated useful lives. The principal lives, in years, used in determining depreciation rates of various assets are: land improvements 15 to 19, buildings and improvements 15 to 25 and machinery and equipment (including computer hardware and software) 3 to 12. Depreciation expense is classified in the consolidated statements of operations based on the nature of the property and equipment being depreciated. Tools, dies and molds are depreciated over a three-year period or their useful lives, whichever is less, using an accelerated method. The Company generally owns all tools, dies and molds related to its products. Property, plant and equipment, net is reviewed for impairment whenever events or circumstances indicate the carrying value may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the asset or related asset group to future undiscounted cash flows expected to be generated by the asset or asset group. If such assets are considered to be impaired, the impairment to be recognized would be measured by the amount by which the carrying value of the assets exceeds their fair value wherein the fair value is the appraised value. Furthermore, assets to be disposed of are carried at the lower of the net book value or their estimated fair value less disposal costs.
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Goodwill and Other Intangible Assets, Net | Goodwill results from acquisitions the Company has made over time. Substantially all of the Company's other intangible assets consist of the cost of acquired product rights. In establishing the value of such rights, the Company considers existing trademarks, copyrights, patents, license agreements and other product-related rights. These rights were valued on their acquisition dates based on the anticipated future cash flows from the underlying product lines. The Company has certain intangible assets related to the Tonka and Milton Bradley acquisitions that have indefinite lives. Goodwill and intangible assets deemed to have indefinite lives are not amortized and are tested for impairment at least annually. The annual goodwill test begins with a qualitative assessment, where qualitative factors and their impact on critical inputs are assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the Company determines that a reporting unit has an indication of impairment based on the qualitative assessment, it is required to perform a quantitative assessment. Prior to the adoption of Accounting Standards Update No. 2017-04 ("ASU 2017-04"), the quantitative assessment consisted of a two-step process beginning with an estimation of fair value of the reporting unit using an income approach, which looked to the present value of expected future cash flows. The first step was a screen for potential impairment while the second step was to determine the implied fair value of the goodwill and compare it to its carrying amount on the balance sheet. Under ASU 2017-04, the Step 2 test was eliminated. As a result, once it has been determined that the carrying amount of a reporting unit exceeds its fair value, the excess carrying amount is recognized as an impairment loss. During the fourth quarter of 2019, the Company performed a qualitative assessment with respect to goodwill associated with its reporting units and determined that it was not necessary to perform a quantitative assessment for the goodwill of the reporting units. During the fourth quarter of 2018, the Company recorded a non-cash impairment charge of $86,253 within administrative expense and in the Company’s Entertainment, Licensing and Digital segment, which was the full amount of remaining goodwill associated with the Backflip reporting unit. See further discussion in note 5. Based on its qualitative assessment of goodwill for all reporting units with the exception of Backflip, the company concluded there was no other impairment of goodwill during 2018. During the fourth quarter of 2017, and prior to the adoption of ASU 2017-04 which eliminated the Step 2 test from the impairment testing process, the Company performed a qualitative assessment with respect to goodwill associated with all but two of its reporting units and determined that it was not necessary to perform a quantitative assessment for the goodwill of these reporting units. The Company performed the first step of the quantitative two-step annual impairment test on the goodwill associated with Backflip and on the goodwill associated with the Company’s Entertainment reporting unit. As a result of the 2017 assessment the Company concluded that no impairments were indicated as the estimated fair values were in excess of the carrying values of the related reporting units. The remaining intangible assets having definite lives are being amortized over periods ranging from two to twenty-five years, primarily using the straight-line method. The Company reviews other intangible assets with definite lives for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the asset to future undiscounted cash flows expected to be generated by the asset or asset group. If such assets were considered to be impaired, the impairment to be recognized would be measured by the amount by which the carrying value of the assets exceeds their fair value wherein that fair value is determined based on discounted cash flows.
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Financial Instruments | Hasbro’s financial instruments include cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable and certain accrued liabilities. At December 29, 2019, the carrying cost of these instruments approximated their fair value. |
Revenue Recognition | Revenue is recognized when control of the promised goods 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. 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. On January 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606 or the “New Revenue Standard”) using the modified retrospective method. ASC 606 superseded the revenue recognition requirements in ASC 605 – Revenue Recognition and most industry-specific guidance in U.S. GAAP. The New Revenue Standard provides a five-step model for analyzing contracts and transactions to determine when, how, and if revenue is recognized. Revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The cumulative impact of the adoption of the New Revenue Standard was not material to the Company therefore the Company did not record any adjustments to retained earnings. This was determined by analyzing contracts not completed as of January 1, 2018. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. For further details, see note 2 for further discussion. Revenue recognition from the sale of finished products to customers, which is the majority of the Company’s revenues, did not change under the new standard and the Company does not expect material changes in the future as a result of the New Revenue Standard related to the sale of finished products to its customers. Within the Company’s Entertainment, Licensing and Digital segment, the timing of revenue recognition for minimum guarantees that the Company receives from licensees was impacted by the New Revenue Standard. Prior to the adoption of ASC 606, for licenses of the Company’s brands that are subject to minimum guaranteed license fees, the Company recognized the difference between the minimum guaranteed amount and the actual royalties earned from licensee merchandise sales (“shortfalls”) at the end of the contract period, which was in the fourth quarter for most of the Company’s licensee arrangements. In periods following January 1, 2018, minimum guaranteed amounts are being recognized on a straight-line basis over the license period. While the impact of this change is not material to full year revenues, it impacts the timing of revenue recognition within the Company’s Entertainment, Licensing and Digital segment such that under ASC 606, less revenues are recorded in the fourth quarter and more revenues are recorded within the first, second, and third quarters. No other areas of the Company’s business were materially impacted by the New Revenue Standard. The majority of the Company’s revenues are derived from sales of finished products to customers. Revenues from sales of finished products to customers accounted for 91%, 92% and 94% of the Company’s revenues for the years ended December 29, 2019, December 30, 2018 and December 31, 2017, respectively. When determining whether control of the finished products has transferred to the customer, the Company considers any future performance obligations. Generally, the Company has no post-shipment obligation on sales of finished products to customers and revenues from product sales are recognized upon passing of title to the customer, which is generally at the time of shipment. Any shipping and handling activities that are performed by the Company, whether before or after a customer has obtained control of the products, are considered activities to fulfill our obligation to transfer the products, and are recorded as incurred within selling, distribution, and administration expenses. The Company offers various discounts, rebates, allowances, returns, and markdowns to its customers (collectively, “allowances”), all of which are considered when determining the transaction price. Certain allowances are fixed and determinable at the time of sale and are recorded at the time of sale as a reduction to revenues. Other allowances can vary depending on future outcomes such as customer sales volume (“variable consideration”). The Company estimates the amount of variable consideration using the expected value method. In estimating the amount of variable consideration using the expected value method, the Company considers various factors including but not limited to: customer terms, historical experience, any expected deviations from historical experience, and existing or expected market conditions. The Company then records an estimate of variable consideration as a reduction to revenues at the time of sale. The Company adjusts its estimate of variable consideration at least quarterly or when facts and circumstances used in the estimation process may change. Historically, adjustments to estimated variable consideration have not been material. The Company enters into contracts to license its intellectual property, which consists of its brands, in various channels including but not limited to: consumer products such as apparel or home goods, within formats such as on-line games, within venues such as theme parks, or within formats such as motion picture films. The licensees pay the Company either a sales-based or usage-based royalty, or a combination of both, for use of the brands, in some cases subject to minimum guaranteed amounts or fixed fees. The license of the Company’s brands provide access to the intellectual property over the term of the license, generally without any other performance obligation of the Company other than keeping the intellectual property active, and is therefore considered a right-to-access license of symbolic intellectual property. The Company records sales-based or usage-based royalty revenues for right-to-access licenses at the occurrence of the licensees’ subsequent sale or usage. When the arrangement includes a minimum guarantee, the Company records the minimum guarantee on a ratable basis over the term of the license period and does not record the sales-based or usage-based royalty revenues until they exceed the minimum guarantee. The Company also produces television or streaming programming for licensing to third parties. The licensees typically pay a fixed fee for the license of the produced content. The content that the Company delivers to its licensees has stand-alone functionality, generally without any other performance obligation of the Company, and is therefore considered a right-to-use license of functional intellectual property. The Company records revenues for right-to-use licenses once the license period has commenced and the licensee has the ability to use the delivered content. In arrangements where the licensee pays the Company a fixed fee for multiple seasons or multiple series of programming, arrangement fees are recorded as revenues based upon their relative fair values. The Company also develops application based digital games featuring its brands within the games. These games are hosted primarily by third-party platform providers. The Company does not charge a fee to the end users for the download of the games or the ability to play the games. The end users make in-application purchases of virtual currencies, via the Company’s platform providers, with such purchased virtual currencies to be used in the games. The Company records revenues from in-application purchases based on either the usage patterns of the players or the player’s estimated life. The Company’s digital game’s revenues are currently recognized within six months of purchase. The Company controls all aspects of the digital goods delivered to the consumer. The third-party platform providers are providing only the service of hosting and administering transactions from the end users. In some cases, the Company is the principal in the arrangement and records the gross revenues within Net Revenues in our Consolidated Statements of Operations. The fees charged by the third-party platform providers to the Company are recorded within cost of sales. In other cases, the Company is an agent in the arrangement and records the revenues, net of related fees, within Net Revenues in our Consolidated Statements of Operations.
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Costs of Sales | Cost of sales primarily consists of purchased materials, labor, tooling, manufacturing overheads and other inventory-related costs such as obsolescence.
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Royalties | The Company enters into license agreements with strategic partners, inventors, designers and others for the use of intellectual properties in its products. These agreements may call for payment in advance or future payment of minimum guaranteed amounts. Amounts paid in advance are recorded as an asset and charged to expense when the related revenue is recognized in the consolidated statements of operations. If all or a portion of the minimum guaranteed amounts appear not to be recoverable through future use of the rights obtained under the license, the non-recoverable portion of the guaranty is charged to expense at that time.
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Advertising | Production costs of commercials are expensed in the fiscal year during which the production is first aired. The costs of other advertising and promotion programs are expensed in the fiscal year incurred.
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Program Production Costs | The Company incurs costs in connection with the production of television programming and motion pictures. These costs are capitalized by the Company as they are incurred and amortized using the individual-film-forecast method, whereby these costs are amortized in the proportion that the current year’s revenues bear to management’s estimate of total ultimate revenues as of the beginning of such period related to the program. These capitalized costs are reported at the lower of cost, less accumulated amortization, or fair value, and reviewed for impairment when an event or change in circumstances occurs that indicates that impairment may exist. The fair value is determined using a discounted cash flow model which is primarily based on management’s future revenue and cost estimates. In March 2019, the FASB issued Accounting Standards Update No. 2019-02 (ASU 2019-02) Entertainment-Films-Other Assets-Film Costs (Subtopic 926-20) and Entertainment-Broadcasters-Intangibles-Goodwill and Other (Subtopic 920-350) - Improvements to Accounting for Costs of Films and License Agreements for Program Materials. The amendments in this update align cost capitalization of episodic television series production costs with that of film production cost capitalization. In addition, this update addresses impairment testing procedures with regard to film groups, when a film or license agreement is expected to be monetized with other films and/or license agreements. The intention of this update is to align accounting treatment with changes in production and distribution models within the entertainment industry and to provide increased transparency of information provided to users of financial statements about produced and licensed content. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company has evaluated the standard and does not expect the standard to materially impact its consolidated financial statements.
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Shipping and Handling | Hasbro expenses costs related to the shipment and handling of goods to customers as incurred. |
Operating Leases | Hasbro recorded lease expense on a straight-line basis inclusive of rent concessions and increases. Reimbursements from lessors for leasehold improvements were deferred and recognized as a reduction to lease expense over the remaining lease term. |
Income Taxes | Hasbro uses the asset and liability approach for financial accounting and reporting of income taxes. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred taxes are measured using rates expected to apply to taxable income in years in which those temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company uses a two-step process for the measurement of uncertain tax positions that have been taken or are expected to be taken in a tax return. The first step is a determination of whether the tax position should be recognized in the consolidated financial statements. The second step determines the measurement of the tax position. The Company records potential interest and penalties on uncertain tax positions as a component of income tax expense.
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Foreign Currency Translation | Foreign currency assets and liabilities are translated into U.S. dollars at period-end exchange rates, and revenues, costs and expenses are translated at weighted average exchange rates during each reporting period. Net earnings include gains or losses resulting from foreign currency transactions and, when required, translation gains and losses resulting from the use of the U.S. dollar as the functional currency in highly inflationary economies. Other gains and losses resulting from translation of financial statements are a component of other comprehensive earnings (loss).
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Pension Plans, Postretirement and Postemployment Benefits | Pension expense and related amounts in the consolidated balance sheets are based on actuarial computations of current and future benefits. Actual results that differ from the actuarial assumptions are accumulated and, if outside a certain corridor, amortized over future periods and, therefore affect recognized expense in future periods. The corridor used for this purpose is equal to 10% of the greater of plan liabilities or market asset values, and future periods vary by plan, but generally equal the actuarially determined average expected future working lifetime of active plan participants. The Company’s policy is to fund amounts which are required by applicable regulations and which are tax deductible. The estimated amounts of future payments to be made under other retirement programs are being accrued currently over the period of active employment and are also included in pension expense. Hasbro has a contributory postretirement health and life insurance plan covering substantially all employees who retired under any of its United States defined benefit pension plans prior to January 1, 2020, and meet certain age and length of service requirements. During the fourth quarter of 2019, with the approval of the Compensation Committee of the Company's Board of Directors, the Company announced the elimination of the contributory postretirement health and life insurance coverage for employees whose retirement eligibility begins after December 31, 2019 (See note 15). The cost of providing these benefits on behalf of employees who retired prior to 1993 has been substantially borne by the Company. The cost of providing benefits on behalf of eligible employees who retire after 1992 is borne by the employee. It also has several plans covering certain groups of employees, which may provide benefits to such employees following their period of employment but prior to their retirement. The Company measures the costs of these obligations based on actuarial computations. In March 2017, the FASB issued Accounting Standards Update No. 2017-7 (ASU 2017-7), Compensation –Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The standard requires companies to present the service cost component of net benefit cost in the income statement line items where they report compensation cost. Companies will present all other components of net benefit cost outside operating income, if this subtotal is presented. For public companies, this standard was effective for annual reporting periods beginning after December 15, 2017, and early adoption was permitted. The Company adopted this standard January 1, 2018 and the adoption of this standard did not have a material impact on the Company’s results or consolidated financial statements in the fiscal years ended December 29, 2019 and December 30, 2018. 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. Upon settlement of the pension liability, which occurred in May 2019, the Company recognized a non-operating settlement charge of $110,777, and an additional settlement charge of $185 in December 2019, related to pension losses, reclassified from accumulated other comprehensive loss to other (income) expense in the Company's consolidated statements of operations, adjusted for market conditions and settlement costs at benefit distribution.
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Stock-Based Compensation | The Company has a stock-based employee compensation plan for employees and non-employee members of the Company’s Board of Directors. Under this plan the Company may grant stock options at or above the fair market value of the Company’s stock, as well as restricted stock, restricted stock units and contingent stock performance awards. All awards are measured at fair value at the date of the grant and amortized as expense on a straight-line basis over the requisite service period of the award. For awards contingent upon Company performance, the measurement of the expense for these awards is based on the Company’s current estimate of its performance over the performance period. See note 14 for further discussion.
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Risk Management Contracts | Hasbro uses foreign currency forward contracts, foreign currency option 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 purchases of inventory and other cross-border currency requirements not denominated in the functional currency of the business unit, are primarily denominated in United States and Hong Kong dollars as well as 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 counterparty would not have a material adverse effect on the financial condition of the Company. Hasbro does not enter into derivative financial instruments for speculative purposes. At the inception of the contracts, Hasbro designates its derivatives as either cash flow or fair value hedges. The Company formally documents all relationships between hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking various hedge transactions. All hedges designated as cash flow hedges are linked to forecasted transactions and the Company assesses, both at the inception of the hedge and on an on-going basis, the effectiveness of the derivatives used in hedging transactions in offsetting changes in the cash flows of the forecasted transaction. In reporting periods prior to 2019, the ineffective portion of a hedging derivative, if any, was recognized in the consolidated statements of operations in other (income) expense. 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 in the consolidated statements of operations and requires the presentation of fair value adjustments to hedging instruments to be included in the same income statement line as the hedged item. For public companies, this standard was effective for annual reporting periods beginning after December 15, 2018. The Company adopted ASU 2017-12 in the first quarter of 2019. The adoption of this standard did not have a material impact on the Company’s results or consolidated financial statements. The Company records all derivatives, such as foreign currency exchange contracts, on the consolidated balance sheets at fair value. Changes in the derivative fair values that are designated as cash flow hedges and are effective are deferred and recorded as a component of Accumulated Other Comprehensive Loss (“AOCE”) until the hedged transactions occur and are then recognized in the consolidated statements of operations. The Company’s foreign currency contracts hedging anticipated cash flows are designated as cash flow hedges. When it is determined that a derivative is not highly effective as a hedge, the Company discontinues hedge accounting prospectively. Any gain or loss deferred through that date remains in AOCE until the forecasted transaction occurs, at which time it is reclassified to the consolidated statements of operations. To the extent the transaction is no longer deemed probable of occurring, hedge accounting treatment is discontinued and amounts deferred would be reclassified to the consolidated statements of operations. In the event hedge accounting requirements are not met, gains and losses on such instruments are included in the consolidated statements of operations. The Company uses derivatives to economically hedge intercompany loans denominated in foreign currencies. The Company does not use hedge accounting for these contracts as changes in the fair value of these contracts are substantially offset by changes in the fair value of the intercompany loans. During the third quarter of 2019 the Company hedged a portion of its exposure to fluctuations in the British pound sterling in relation to the Entertainment One Ltd. ("eOne") acquisition purchase price and other transaction related costs using a series of both foreign exchange forward and option contracts. The Company recorded realized gains of $80,000 to other (income) expense, net on the matured portion of these hedging instruments for the year ended December 29, 2019. These instruments did not qualify for hedge accounting and as such, the outstanding portion of these hedging instruments were marked to market through the Company's Consolidated Statement of Operations resulting in unrealized gains of $34,100 recorded to other (income) expense, net for the year ended December 29, 2019. Prior to the issuance of certain long-term notes due 2021 and 2044, the Company entered into a forward-starting interest rate swap contract to hedge the anticipated U.S. Treasury interest rates on the anticipated debt issuance. These instruments, which were designated and effective as hedges, were terminated on the date of the related debt issuance and the then fair value of these instruments was recorded to AOCE and amortized through the consolidated statements of operations using an effective interest rate method over the life of the related debt.
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Net Earnings Per Common Share | Basic net earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding for the year as well as awards that have not been issued but all contingencies have been met. Diluted net earnings per share is similar except that the weighted average number of shares outstanding is increased by dilutive securities, and net earnings are adjusted, if necessary, for certain amounts related to dilutive securities. Dilutive securities include shares issuable upon exercise of stock options for which the market price exceeds the exercise price, less shares which could have been purchased by the Company with the related proceeds. Dilutive securities also include shares issuable under restricted stock unit award agreements. |
Goodwill and Intangibles (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Changes in the carrying amount of goodwill, by operating segment, for the years ended December 29, 2019 and December 30, 2018 are as follows:
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Schedule of Other Intangibles | he Company’s other intangible assets, net at December 29, 2019 and December 30, 2018:
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Schedule of Expected Amortization Expense | The Company currently estimates amortization expense related to the above intangible assets for the next five years to be approximately:
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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 29, 2019 |
Dec. 30, 2018 |
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Current assets | ||
Accounts receivable, allowance for doubtful accounts | $ 17,200 | $ 9,100 |
Shareholders’ equity | ||
Preference stock, par value (in dollars per share) | $ 2.5 | $ 2.5 |
Preference stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preference stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.5 | $ 0.5 |
Common stock, shares authorized (in shares) | 600,000,000 | 600,000,000 |
Common stock, shares issued (in shares) | 220,286,736 | 209,694,630 |
Treasury stock, at cost, shares (in shares) | 83,424,129 | 83,565,598 |
Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interests - USD ($) $ in Thousands |
Total |
Common Stock |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Treasury Stock |
Total Shareholders’ Equity |
Redeemable Noncontrolling Interests |
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Beginning Balance at Dec. 25, 2016 | $ 104,847 | $ 985,418 | $ 4,148,722 | $ (194,570) | $ (3,181,681) | $ 1,862,736 | $ 22,704 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net earnings | $ 396,607 | 396,607 | 396,607 | |||||
Acquisition of remaining interest in Backflip | 22,704 | 22,704 | (22,704) | |||||
Other comprehensive loss | (44,855) | (44,855) | (44,855) | |||||
Stock-based compensation transactions | (13,021) | (16,001) | (29,022) | |||||
Purchases of common stock | (150,054) | (150,054) | ||||||
Stock-based compensation expense | 54,588 | 1,444 | 56,032 | |||||
Dividends declared | (284,410) | (284,410) | ||||||
Ending Balance at Dec. 31, 2017 | 104,847 | 1,050,605 | 4,260,222 | (239,425) | (3,346,292) | 1,829,957 | 0 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Cumulative effect of the new accounting principle in period of adoption | Impact of adoption of ASU 2016-09 | 916 | (697) | 219 | |||||
Net earnings | 220,434 | 220,434 | 220,434 | |||||
Issuance of shares | 198,853 | 81,544 | 280,397 | |||||
Other comprehensive loss | (33,586) | (33,586) | (33,586) | |||||
Stock-based compensation transactions | (2,075) | (694) | (2,769) | |||||
Purchases of common stock | (250,054) | (250,054) | ||||||
Stock-based compensation expense | 27,676 | 216 | 27,892 | |||||
Dividends declared | (317,785) | (317,785) | ||||||
Ending Balance at Dec. 30, 2018 | 1,754,486 | 104,847 | 1,275,059 | 4,184,374 | (294,514) | (3,515,280) | 1,754,486 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net earnings | 520,454 | 520,454 | 520,454 | |||||
Issuance of shares | 5,296 | 969,889 | 0 | 975,185 | ||||
Other comprehensive loss | 110,294 | 110,294 | 110,294 | |||||
Stock-based compensation transactions | 2,970 | 15,693 | 18,663 | |||||
Purchases of common stock | (61,387) | (61,387) | (61,387) | |||||
Stock-based compensation expense | 27,808 | 236 | 28,044 | |||||
Dividends declared | (350,209) | (350,209) | ||||||
Ending Balance at Dec. 29, 2019 | $ 2,995,530 | $ 110,143 | $ 2,275,726 | $ 4,354,619 | $ (184,220) | $ (3,560,738) | $ 2,995,530 | $ 0 |
Accrued Liabilities |
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Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | Accrued Liabilities Components of accrued liabilities for the fiscal years ended on December 29, 2019 and December 30, 2018 are as follows:
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Goodwill and Intangibles |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangibles | Goodwill and Intangible Assets Goodwill Changes in the carrying amount of goodwill, by operating segment, for the years ended December 29, 2019 and December 30, 2018 are as follows:
Goodwill in the amount of $9,117 acquired during 2019 is attributable to the Company's acquisition of Tuque Games ("Tuque") during October 2019. Tuque is a digital game development studio based in Montreal, Canada that will develop digital games for Wizards of the Coast brands. 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, a portion of the U.S. and Canada goodwill was reclassified to the Entertainment, Licensing and Digital segment based on the relative fair values of the reporting units. A portion of the Company’s goodwill and other intangible assets reside in the Corporate segment of the business. For purposes of the goodwill impairment testing, these assets are allocated to the reporting units within the Company’s operating segments. The Company performs an annual impairment assessment on goodwill. This annual impairment assessment is performed in the fourth quarter of the Company’s fiscal year. In addition, if an event occurs or circumstances change that indicate that the carrying value may not be recoverable, the Company will perform an interim impairment test at that time. The Company completed its annual impairment tests of goodwill in the fourth quarter of 2019 and concluded that there was no impairment of its goodwill.During the fourth quarter of 2018, the Company took a number of actions to react to a rapidly changing mobile gaming industry that resulted in a modification to the Company’s long-term plan for its Backflip business. These modifications included organizational actions and related personnel changes, the extension of launch dates for game currently in or planned for development and the addition of partners for the development of future games releases. The modifications resulted in changes to the long-term projections for the Backflip business. The goodwill impairment analysis involved comparing the Backflip carrying value to its estimated fair value, which was calculated based on the Income Approach. Discounted cash flows serve as the primary basis for the Income Approach. The Company utilized forecasted cash flows for the Backflip reporting unit that included assumptions including but not limited to: expected revenues to be realized based on planned future mobile game releases, expected EBITDA margins derived in part based on expected future royalty costs, advertising and marketing costs, development costs, overhead costs, and expected future tax rates. The cash flows beyond the forecast period were estimated using a terminal value growth rate of 3%. To calculate the fair value of the future cash flows under the Income Approach, a discount rate of 19% was utilized, representing the reporting unit’s estimated weighted-average cost of capital. Based on the results of the impairment test, the Company determined that the carrying value of the Backflip reporting unit exceeded its estimated fair value. Based on this assessment, the Company recorded an impairment charge of $86,253 in the fourth quarter of 2018, in the Company’s Entertainment, Licensing and Digital segment, which was the full amount of remaining goodwill associated with the Backflip reporting unit. Based on its qualitative assessment of goodwill for all reporting units with the exception of Backflip in 2018, the Company concluded there was no other impairment of goodwill during 2018. Other Intangible Assets, Net The following table represents a summary of the Company’s other intangible assets, net at December 29, 2019 and December 30, 2018:
Certain intangible assets relating to rights obtained in the Company’s acquisition of Milton Bradley in 1984 and Tonka in 1991 are not amortized. These rights were determined to have indefinite lives and are included as product rights with indefinite lives in the table above. The Company tests these assets for impairment on an annual basis in the fourth quarter of each year or when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. The Company completed its annual impairment tests of indefinite-lived intangible assets in the fourth quarter of 2019, 2018, and 2017 concluding that there was no impairment of these assets. The Company’s other intangible assets are amortized over their remaining useful lives, and accumulated amortization of these other intangibles is reflected in other intangible assets, net in the accompanying consolidated balance sheets. Intangible assets are reviewed for indications of impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. There were no impairments in 2019 or 2017. In the fourth quarter of 2018, the Company reviewed intangible assets recorded in connection with licensed property rights and owned technology. Due to a decline in revenue and revised projections for future revenue, it was determined that the intangible asset carrying values exceeded expected future cash flows, indicating that the intangible assets were impaired. The Company calculated the fair value of the intangible assets based on a discounted cash flow, which resulted in a charge of $31,303 recorded within administrative expense and in the Company’s Corporate and Eliminations segment. Other than the intangible assets discussed above, no other indications of impairment existed. The Company will continue to incur amortization expense related to the use of acquired and licensed rights to produce various products. A portion of the amortization of these product rights will fluctuate depending on brand activation, related revenues during an annual period and future expectations, as well as rights reaching the end of their useful lives. The Company currently estimates amortization expense related to the above intangible assets for the next five years to be approximately:
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Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | 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 and 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 Hasbro 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 are considered to be cash flow hedges. These instruments hedge a portion of the Company’s currency requirements associated with anticipated inventory purchases and other cross-border transactions in years 2020 through 2022. At December 29, 2019 and December 30, 2018, the notional amounts and fair values of assets (liabilities) for the Company’s foreign currency forward contracts designated as cash flow hedging instruments were as follows:
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 sheet at December 29, 2019 and December 30, 2018 as follows:
Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings to net earnings for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 as follows:
Undesignated Hedges The Company also enters into foreign currency forward contracts to minimize the impact of changes in the fair value of intercompany loans due to foreign currency changes. The Company does not use hedge accounting for these contracts as changes in the fair values of these contracts are substantially offset by changes in the fair value of the intercompany loans. As of December 29, 2019 and December 30, 2018, the total notional amounts of the Company’s undesignated derivative instruments were $307,351 and $452,773, respectively. At December 29, 2019 and December 30, 2018, the fair value of the Company’s undesignated derivative financial instruments are recorded in the consolidated balance sheets as follows:
The Company recorded net gains (losses) of $13,443, $11,698 and $(4,267) on these instruments to other (income) expense, net for 2019, 2018 and 2017, respectively, relating to the change in fair value of such derivatives, substantially offsetting gains and losses from the change in fair value of intercompany loans to which the instruments relate. eOne Purchase Hedges As described in note 22, during the third quarter of 2019 the Company hedged a portion of its exposure to fluctuations in the British pound sterling and other transactions in relation to the eOne acquisition using a series of both foreign exchange forward and option contracts. These contracts do 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 qualify as nontaxable integrated tax hedges. As of December 29, 2019, the outstanding derivative instruments had a total notional value of $4,468,822 and a net fair value of $34,143 which is recorded to prepaid expenses and other assets within the Company's consolidated financial statements. In addition, the Company recorded realized gains of $79,990 on matured contracts to other (income) expense, net for the year ended December 29, 2019. For additional information related to the Company’s derivative financial instruments see notes 3 and 13.
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures certain assets at fair value in accordance with current accounting standards. The fair value hierarchy consists of three levels: Level 1 fair values are valuations 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 valuations 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 valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. There have been no transfers between levels within the fair value hierarchy. Current accounting standards permit entities to choose 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 investments using net asset value per share. At December 29, 2019 and December 30, 2018, these investments totaled $25,518 and $23,913, respectively, and are included in prepaid expenses and other current assets in the consolidated balance sheets. The Company recorded net gains (losses) of $1,903, $(180) and $1,500 on these investments in other (income) expense, net for the years ended December 29, 2019, December 30, 2018 and December 31, 2017, respectively, relating to the change in fair value of such investments At December 29, 2019 and December 30, 2018, 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):
Available-for-sale securities include equity securities of one company quoted on an active public market. The Company’s derivatives consist of foreign currency forward contracts. The Company used current forward rates of the respective foreign currencies to measure the fair value of these contracts. The option agreement included in other liabilities at December 29, 2019 and December 30, 2018 is valued using an option pricing model based on the fair value of the related investment. Inputs used in the option pricing model include volatility and fair value of the underlying company which are considered unobservable inputs as they reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability. The Company believes that this is the best information available for use in the fair value measurement. There were no changes in these valuation techniques during 2019. The following is a reconciliation of the beginning and ending balances of the fair value measurements of the Company’s financial instruments which use significant unobservable inputs (Level 3):
In addition to the above, the Company has three investments for which the fair value is measured using net asset value per share. At December 29, 2019 and December 30, 2018 these investments had fair values of $25,518 and $23,913, 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 – 90 days’ notice.
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Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Reporting Segment and Geographic Information Hasbro is a global play and entertainment company with a broad portfolio of brands and entertainment properties spanning toys, games, licensed products ranging from traditional to high-tech and digital, and film and television entertainment. For the periods presented in these consolidated financial statements, the Company’s segments are (i) U.S. and Canada, (ii) International, (iii) Entertainment, Licensing and Digital, and (iv) Global Operations. The U.S. and Canada segment includes the marketing and selling of action figures, arts and crafts and creative play products, electronic toys and related electronic interactive products, fashion and other dolls, infant products, play sets, preschool toys, plush products, sports action blasters and accessories, vehicles and toy-related specialty products, as well as traditional board games, and trading card and role-playing games primarily within the United States and Canada. Within the International segment, the Company markets and sells both toy and game products in markets outside of the U.S. and Canada, primarily in the European, Asia Pacific, and Latin and South American regions. The Company’s Entertainment, Licensing and Digital segment includes the Company’s consumer products licensing, digital gaming, movie and television entertainment operations. 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, 2018 and 2017 results for the U.S. and Canada and the former Entertainment and Licensing segments have been restated to reflect those changes. Segment performance is measured at the operating profit level. Included in Corporate and eliminations are certain corporate expenses, including the elimination of intersegment transactions and certain assets benefiting more than one segment. Intersegment sales and transfers are reflected in management reports at amounts approximating cost. Certain shared costs, including global development and marketing expenses and corporate administration, are allocated to segments based upon expenses and foreign exchange rates fixed at the beginning of the year, with adjustments to actual expenses and foreign exchange rates included in Corporate and eliminations. The accounting policies of the segments are the same as those referenced in note 1. Results shown for fiscal years 2019, 2018 and 2017 are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise. Information by segment and a reconciliation to reported amounts are as follows:
The following table represents consolidated International segment net revenues by major geographic region for the three fiscal years ended December 29, 2019.
The following table presents consolidated net revenues by brand portfolio for the three fiscal years ended December 30, 2018.
For the year ended December 31, 2017, net revenues of $122,432 were reclassified from Emerging Brands to Franchise Brands to conform to the presentation for the years ended December 29, 2019 and December 30, 2018. Hasbro’s total gaming category, including all gaming net revenues, most notably MAGIC: THE GATHERING and MONOPOLY, totaled $1,528,283, $1,443,164 and $1,497,795 for the years ended December 29, 2019, December 30, 2018 and December 31, 2017, respectively. Information as to Hasbro’s operations in different geographical areas is presented below on the basis the Company uses to manage its business. Net revenues are categorized based on location of the customer, while long-lived assets (property, plant and equipment, goodwill and other intangibles) are categorized based on their location.
Principal international markets include Europe, Canada, Mexico and Latin America, Australia, China and Hong Kong. Long-lived assets include property, plant and equipment, goodwill and other intangibles. Other Information Hasbro markets its products primarily to customers in the retail sector. Although the Company closely monitors the creditworthiness of its customers, adjusting credit policies and limits as deemed appropriate, a substantial portion of its customers’ ability to discharge amounts owed is generally dependent upon the overall retail economic environment. In 2019 the Company’s largest customers were Wal-Mart Stores, Inc., Target Corporation, and Amazon.com. Sales to these customers amounted to 18%, 9% and 8%, respectively of consolidated net revenues in 2019. In 2018 the Company’s largest customers were Wal-Mart Stores, Inc. and Target Corporation. Sales to these customers amounted to 20% and 9%, respectively of consolidated net revenues during 2018. In 2017 the Company’s largest customers were Wal-Mart Stores, Inc., Toys“R”Us, Inc. and Target Corporation. Sales to these customers amounted to 19%, 9% and 9%, of consolidated net revenues during 2017. These sales were primarily within the U.S. and Canada segment. Hasbro purchases certain components used in its manufacturing process and certain finished products from manufacturers in the Far East. The Company’s reliance on external sources of manufacturing can be shifted, over a period of time, to alternative sources of supply for products it sells, should such changes be necessary. However, if the Company were prevented from obtaining products from a substantial number of its current Far East suppliers due to political, labor or other factors beyond its control, the Company’s operations would be disrupted, potentially for a significant period of time, while alternative sources of product were secured. The imposition of trade sanctions, tariffs, border adjustment taxes or other measures by the United States or the European Union against a class of products imported by Hasbro from, or the loss of “normal trade relations” status with, China, or other countries where we manufacture products, or other factors which increase the cost of manufacturing in China, or other countries where we manufacture products, such as higher labor costs or an appreciation in the Chinese Yuan, could significantly disrupt our operations and/or significantly increase the cost of the products which are manufactured and imported into other markets. The Company has agreements which allow it to develop and market products based on properties owned by third parties including its license with Marvel Entertainment, LLC and Marvel Characters B.V. (together “Marvel”) and its license with Lucas Licensing Ltd. and Lucasfilm Ltd. (together “Lucas”). These licenses have multi-year terms and provide the Company with the right to market and sell designated classes of products based on Marvel’s portfolio of brands, including SPIDER-MAN and THE AVENGERS, and Lucas’s STAR WARS brand. The Company also has a license to market products with The Walt Disney Company for DISNEY PRINCESS and DISNEY FROZEN lines. Hasbro’s net revenues from these licenses can be significant in any given year based on the level of third party entertainment. In addition to DISNEY PRINCESS and DISNEY FROZEN, both Marvel and Lucas are owned by The Walt Disney Company.
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Derivative Financial Instruments - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Dec. 29, 2019 |
Sep. 29, 2019 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Fair value hedging | Foreign exchange forward | |||||
Derivative [Line Items] | |||||
Other (income) expense | $ 13,443 | $ 11,698 | $ (4,267) | ||
Fair value hedging | Not designated as hedging instrument | Foreign currency forward contract | |||||
Derivative [Line Items] | |||||
Derivative, notional amount | $ 307,351 | 307,351 | $ 452,773 | ||
eOne Acquisition | Not designated as hedging instrument | Foreign exchange contract | |||||
Derivative [Line Items] | |||||
Derivative, notional amount | 4,468,822 | 4,468,822 | |||
Net unrealized gain (loss) | 34,143 | 34,143 | |||
Other Operating Income (Expense) | eOne Acquisition | Not designated as hedging instrument | Foreign exchange contract | |||||
Derivative [Line Items] | |||||
Other (income) expense | $ 139,666 | $ 25,533 | $ (79,990) |
Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands |
Dec. 29, 2019 |
Mar. 31, 2019 |
---|---|---|
Leases [Abstract] | ||
2020 | $ 36,358 | |
2021 | 31,767 | |
2022 | 28,820 | |
2023 | 22,622 | |
2024 | 13,099 | |
2025 and thereafter | 33,596 | |
Total future lease payments | 166,262 | |
Less imputed interest | 22,207 | |
Lease liabilities | 144,055 | $ 139,520 |
Less current portion of operating lease liabilities | 30,673 | |
Non-current operating lease liability | 113,382 | |
Operating lease right-of-use asset, net | $ 126,680 | $ 121,230 |
Program Production Costs (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
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Direct-to-television Film Costs [Abstract] | ||
Released, less amortization | $ 22,361 | $ 30,800 |
In production | 47,291 | 42,768 |
Pre-production | 964 | 489 |
Theatrical Film Costs [Abstract] | ||
Released, less amortization | 21,264 | 71,339 |
In production | 19,722 | 9,503 |
Pre-production | 6,147 | 2,452 |
Total program production costs | 117,749 | $ 157,351 |
Amortization expected for the released programs in next operating period | 40,342 | |
Total unamortized programming costs related to released productions | $ 43,625 | |
Period of amortization for the unamortized television programming costs related to released productions | P5Y |
Segment Reporting - Geographic Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 |
Sep. 29, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 30, 2018 |
Sep. 30, 2018 |
Jul. 01, 2018 |
Apr. 01, 2018 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net revenues | $ 1,428,007 | $ 1,575,173 | $ 984,537 | $ 732,510 | $ 1,389,161 | $ 1,569,686 | $ 904,458 | $ 716,341 | $ 4,720,227 | $ 4,579,646 | $ 5,209,782 |
Long-lived assets | 1,523,137 | 1,436,197 | 1,523,137 | 1,436,197 | 1,050,155 | ||||||
United States | Operating Segments | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net revenues | 2,653,337 | 2,497,331 | 2,732,034 | ||||||||
Long-lived assets | 1,299,317 | 1,287,444 | 1,299,317 | 1,287,444 | 894,597 | ||||||
International | Operating Segments | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net revenues | 2,066,890 | 2,082,315 | 2,477,748 | ||||||||
Long-lived assets | $ 223,820 | $ 148,753 | $ 223,820 | $ 148,753 | $ 155,558 |
Stock Options, Other Stock Awards and Warrants (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Total Compensation Expense Related to Stock Options, Restricted Stock Units and Stock Performance Awards | Total compensation expense related to stock options, restricted stock units, including those awards made to non-employee members of its Board of Directors, and stock performance awards for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 was $28,044, $27,892 and $56,032, respectively, and was recorded as follows:
The following table represents total stock compensation expense, net of performance adjustments, by award type related to stock performance awards, restricted stock units, stock options and awards made to non-employee members of the Company’s Board of Directors, for the years ended December 29, 2019, December 30, 2018 and December 31, 2017:
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Schedule of Stock Performance Awards | Information with respect to Stock Performance Awards for 2019, 2018 and 2017 is as follows:
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Schedule of Restricted Stock Awards and Restricted Stock Units | Excluding the aforementioned award for 587 shares, information with respect to the remaining Restricted Stock Awards and Restricted Stock Units for 2019, 2018 and 2017 is as follows:
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Schedule of Stock Option Information | Information with respect to stock options for each of the three fiscal years ended December 29, 2019 is as follows:
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Schedule of Share-based Payment Award, Stock Option, Valuation Assumptions | The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the fiscal years 2019, 2018 and 2017:
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Acquisition (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of business acquisition | The total purchase price for the assets was $535,850, consisting of the following:
4. An additional $75,000 was paid in January 2019 with no contingencies.
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Commitments and Contingencies (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
|
Other Commitments [Line Items] | ||
Unused open letters of credit and related instruments | $ 14,000 | $ 29,000 |
Purchase commitments | 670,973 | |
Royalties | ||
Other Commitments [Line Items] | ||
2020 | 110,969 | |
2021 | 98,550 | |
2022 | 66,892 | |
2023 | 153 | |
2024 | 153 | |
Thereafter | 459 | |
Prepaid royalties | 67,574 | |
Royalties | Prepaid expenses and other current assets | ||
Other Commitments [Line Items] | ||
Prepaid royalties | 52,869 | |
Royalties | Other assets | ||
Other Commitments [Line Items] | ||
Prepaid royalties | 14,705 | |
Tax sharing agreement | ||
Other Commitments [Line Items] | ||
Estimated payments | 29,300 | |
Range of tax sharing payments each year, minimum | 4,700 | |
Range of tax sharing payments each year, maximum | 6,000 | |
Aggregate payment for all years occurring thereafter | 3,210 | |
Cartamundi manufacturing agreement | ||
Other Commitments [Line Items] | ||
2020 | 120,000 | |
2021 | 105,000 | |
2022 | 95,000 | |
2023 | $ 85,000 |
Property, Plant and Equipment - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 133,528 | $ 139,255 | $ 143,018 |
Other Comprehensive Earnings (Loss) - Schedule of Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||
Tax (expense) benefit on unrealized holding (losses) gains | $ (150) | $ 581 | $ 221 |
Tax benefit (expense) on cash flow hedging activities | 223 | ||
Tax benefit (expense) on cash flow hedging activities | (930) | 4,850 | |
Tax (expense) benefit on changes in unrecognized pension amounts | (3,518) | 6,085 | (2,363) |
Tax expense (benefit) on cash flow hedging activities | 2,269 | ||
Tax expense (benefit) on cash flow hedging activities | 817 | (4,881) | |
Tax benefit on amortization of unrecognized pension and postretirement amounts reclassified to the consolidated statements of operations | (2,005) | (2,729) | (3,482) |
Tax benefit on settlement of U.S. defined benefit plan | (24,966) | 0 | 0 |
Total tax effect on other comprehensive earnings (loss) | $ (28,147) | $ 3,824 | $ (5,655) |
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 29, 2019 |
Dec. 30, 2018 |
---|---|---|
Deferred tax assets: | ||
Accounts receivable | $ 26,973 | $ 29,094 |
Inventories | 10,020 | 11,958 |
Loss and credit carryforwards | 35,509 | 105,915 |
Operating leases | 15,378 | |
Operating expenses | 23,686 | 21,213 |
Pension | 6,206 | 11,543 |
Other compensation | 27,633 | 35,418 |
Postretirement benefits | 7,053 | 7,894 |
Interest rate hedge | 5,202 | 5,607 |
Tax sharing agreement | 3,096 | 4,015 |
Other | 15,122 | 9,077 |
Gross deferred tax assets | 175,878 | 241,734 |
Valuation allowance | (33,260) | (36,311) |
Net deferred tax assets | 142,618 | 205,423 |
Deferred tax liabilities: | ||
Depreciation and amortization of long-lived assets | 13,361 | 12,258 |
Equity method investment | 17,674 | 15,113 |
Operating leases | 11,936 | |
Other | 9,852 | 9,885 |
Deferred tax liabilities | 52,823 | 37,256 |
Net deferred income taxes | $ 89,795 | $ 168,167 |
Stock Options, Other Stock Awards and Warrants - Stock Options (Details) - Share-based Payment Arrangement, Option - $ / shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Outstanding at beginning of year | 2,310 | 2,579 | 2,768 |
Granted (in shares) | 740 | 538 | 458 |
Exercised (in shares) | (546) | (736) | (597) |
Expired or forfeited (in shares) | (60) | (71) | (50) |
Outstanding at end of year | 2,444 | 2,310 | 2,579 |
Exercisable at end of year (in shares) | 1,284 | 1,391 | 1,661 |
Weighted average exercise price: | |||
Granted (in dollars per share) | $ 86.66 | $ 98.10 | $ 98.80 |
Exercised (in dollars per share) | 58.18 | 45.64 | 49.31 |
Expired or forfeited (in dollars per share) | 95.71 | 93.81 | 57.33 |
Outstanding at end of year (in dollars per share) | 81.58 | 74.78 | 62.12 |
Exercisable at end of year (in dollars per share) | $ 73.03 | $ 61.59 | $ 50.02 |
Pension, Postretirement and Postemployment Benefits - Assumptions used to determine year-end Pension and Postretirement Benefit Obligation (Details) |
12 Months Ended | |
---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
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Pension | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Weighted average discount rate | 3.30% | 3.72% |
Postretirement | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Weighted average discount rate | 3.46% | 4.33% |
Health care cost trend rate assumed for next year | 6.25% | 6.50% |
Rate to which the cost trend rate is assumed to decline (ultimate trend rate) | 5.00% | 5.00% |
Stock Options, Other Stock Awards and Warrants - Total Compensation Expense Related to Stock Options, Restricted Stock Units and Stock Performance Awards (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Allocated share-based compensation (income) expense | $ 28,044 | $ 27,892 | $ 56,032 |
Income tax benefit | 3,648 | 2,832 | 9,574 |
Allocated share-based compensation expense, net of tax | 24,396 | 25,060 | 46,458 |
Product development | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Allocated share-based compensation (income) expense | 3,348 | 3,466 | 3,312 |
Selling, distribution and administration | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Allocated share-based compensation (income) expense | $ 24,696 | $ 24,426 | $ 52,720 |
Pension, Postretirement and Postemployment Benefits - Expected Benefit Payments (Details) $ in Thousands |
Dec. 29, 2019
USD ($)
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Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
2025-2029 | $ 15,801 |
Pension | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
2020 | 2,488 |
2021 | 2,453 |
2022 | 2,379 |
2023 | 2,405 |
2024 | 2,534 |
2025-2029 | 11,072 |
Postretirement | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
2020 | 1,797 |
2021 | 1,743 |
2022 | 1,694 |
2023 | 1,644 |
2024 | 1,600 |
2025-2029 | $ 7,352 |
Income Taxes |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The Tax Cuts and Jobs Act (the “Tax Act”) enacted on December 22, 2017 introduced significant changes to U.S. income tax law. Effective 2018, the Tax Act reduced the U.S. statutory tax rate from 35% to 21% and created new taxes on certain foreign-sourced earnings and certain related-party payments. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in our consolidated financial statements as of December 31, 2017. As the Company collected and prepared necessary data, and interpreted the additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service, and other standard-setting bodies, the Company made adjustments, over the course of 2018, to the provisional amounts including additional tax expense of $40,650, primarily related to adjustments to the transition tax. The accounting for the tax effects of the Tax Act was completed as of December 30, 2018. The components of earnings before income taxes, determined by tax jurisdiction, are as follows:
Income taxes attributable to earnings before income taxes are:
A reconciliation of the statutory United States federal income tax rate to Hasbro’s effective income tax rate is as follows:
The components of deferred income tax expense (benefit) arise from various temporary differences and relate to items included in the consolidated statements of operations as well as items recognized in other comprehensive earnings. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 29, 2019 and December 30, 2018 are:
The most significant amount of the carryforward relates to tax attributes of U.S. state net operating losses and tax credits. At December 29, 2019, the Company has loss and credit carryforwards of $35,509, which is a decrease of $70,406 from $105,915 at December 30, 2018. This decrease is primarily a result of a reclassification to reduce the Company's transition tax liability. At December 29, 2019 and December 30, 2018, the Company’s net deferred income taxes are recorded in the consolidated balance sheets as follows:
The Company has a valuation allowance for certain deferred tax assets at December 29, 2019 of $33,260, which is a decrease of $3,051 from $36,311 at December 30, 2018. The valuation allowance pertains to certain U.S. state and international loss and credit carryforwards, some of which have no expiration and others that would expire beginning in 2020. We previously considered the earnings in our non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes. The Tax Act eliminates the deferral of U.S. income tax on these foreign earnings by imposing a transition tax which is a one-time mandatory deemed repatriation tax. As a result we now intend to repatriate substantially all of our accumulated foreign earnings. The Company still has significant cash needs outside the United States and continues to consistently monitor and analyze its global working capital and cash requirements. However, tax reform gives companies more flexibility to manage cash globally. We have recorded $1,657 of foreign withholding and U.S. state income taxes as part of the provisional repatriation tax amount, which will be incurred due to certain future cash distributions. The Company has not finalized the timing of any actual cash distributions or the specific amounts and therefore we could still be subject to some additional foreign withholding taxes and U.S. state taxes. We will record these additional tax effects, if any, in the period that we complete our analysis and are able to make a reasonable estimate. A reconciliation of unrecognized tax benefits, excluding potential interest and penalties, for the fiscal years ended December 29, 2019, December 30, 2018, and December 31, 2017 is as follows:
Unrecognized tax benefits as of December 29, 2019, December 30, 2018 and December 31, 2017, were $36,651, $46,074, and $84,244, respectively, and are recorded within other liabilities in the Company's consolidated balance sheets. If recognized, these tax benefits would have affected our income tax provision for fiscal years 2019, 2018, and 2017, by approximately $36,000, $45,000, and $77,000, respectively. During 2019, 2018, and 2017, the Company recognized $1,766, $3,101, and $2,431, respectively, of potential interest and penalties, which are included as a component of income taxes in the accompanying consolidated statements of operations. At December 29, 2019, December 30, 2018, and December 31, 2017, the Company had accrued potential interest and penalties of $5,547, $4,200, and $5,157, respectively. The Company and its subsidiaries file income tax returns in the United States and various state and international jurisdictions. In the normal course of business, the Company is regularly audited by U.S. federal, state and local and international tax authorities in various tax jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for years before 2013. 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. 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 are effective on January 1, 2020. Changes in tax reform include the abolishment of preferential tax regimes for holding companies, domicile companies and mixed companies at the cantonal level. The enacted changes in Swiss federal tax were not material to the Company’s financial statements. Swiss cantonal tax was enacted in December 2019. Due to the uncertain nature of the cantonal legislation, the Company is still assessing the transitional provision options it may elect; however, the pending legislation is not expected to have a material effect on the Company’s financial statements. We will continue to review TRAF as the Swiss authorities provide additional interpretive guidance on the new law and related transitional methodology. The Company believes it is reasonably possible that a decrease of approximately $5,000 - $13,000 in gross unrecognized tax benefits may be necessary within the coming year as a result of expected tax return settlements and lapse of statute of limitations.
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Program Production Costs |
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Other Industries [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Program Production Costs | Program Production Costs Program production costs are included in other assets and consist of the following at December 29, 2019 and December 30, 2018:
Based on management’s total revenue estimates at December 29, 2019, $40,342 of $43,625 unamortized programming costs relating to released productions are expected to be amortized during fiscal 2020. Based on current estimates, the Company expects to amortize all of the programming costs relating to released productions during the next five years.
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Other Comprehensive Earnings (Loss) |
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Earnings (Loss) | Other Comprehensive Earnings (Loss) Components of other comprehensive earnings (loss) are presented within the consolidated statements of comprehensive earnings. The following table presents the related tax effects on changes in other comprehensive earnings (loss) for each of the three fiscal years ended December 29, 2019.
Changes in the components of accumulated other comprehensive earnings (loss), net of tax are as follows:
Gains (Losses) on Derivative Instruments At December 29, 2019, the Company had remaining net deferred gains on foreign currency forward contracts, net of tax, of $12,686 in AOCE. These instruments hedge payments related to inventory purchased in the fourth quarter of 2019 or forecasted to be purchased from 2020 through 2022, intercompany expenses expected to be paid or received during 2020, television and movie production costs paid in 2019 or expected to be paid in 2020, and cash receipts for sales forecasted to be made in 2020 through 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, royalties or expenses. In addition to foreign currency forward contracts, the Company entered into hedging contracts on future interest payments related to the long-term notes due 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 December 29, 2019, deferred losses, net of tax, of $17,918 related to these instruments remained in AOCE. For the year ended December 29, 2019, losses, net of tax of $1,394 related to these hedging instruments were reclassified from AOCE to net earnings. For each of the years ended December 30, 2018 and December 31, 2017, losses, net of tax of $1,394 and $1,170 related to these hedging instruments were reclassified from AOCE to net earnings. Of the net deferred gains included in AOCE at December 29, 2019, the Company expects approximately $7,041 to be reclassified to the consolidated statements of operations within the next 12 months. However, the amount ultimately realized in earnings is dependent on the fair value of the hedging instruments on the settlement dates. See notes 15 and 17 for additional discussion on reclassifications from AOCE to earnings.
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Revenue Recognition |
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Dec. 29, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition In addition to the required disclosures below, please see further discussion of the Company revenue recognition policy in note 1. As of December 29, 2019, the Company did not have any material future performance commitments for film streaming or television orders that have not yet been delivered. Contract Assets and Liabilities A contract asset is defined as an entity’s right to consideration for goods or services that the entity has transferred to a customer. A contract liability is defined to occur if the customer’s payment of consideration precedes the entity’s performance and represents the entity’s obligation to transfer goods or services to a customer for which the entity has received consideration. The Company occasionally will require payment from customers for finished product in advance of the customer receiving control of the finished product. In these situations, the Company defers revenue on the advanced payment until the customer has control of the finished product, generally within the next month. Within our Entertainment, Licensing and Digital 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. The Company defers revenues on these advanced payments until its performance obligation is satisfied. The aggregate deferred revenues are recorded as liabilities and were $46,766, and $50,759 as of December 29, 2019 and December 30, 2018, respectively, and the changes in deferred revenues are not material to the Company’s consolidated statement of operations for the years ended December 29, 2019 and December 30, 2018. The Company records contract assets in the case of minimum guarantees, that are being recognized ratably over the term of the respective license periods. At December 29, 2019 and December 30, 2018, these contract assets were $46,959 and $18,166, respectively, of which $32,182 and $12,895, respectively, were recorded in Prepaid Expenses and Other Current Assets and $14,777 and $5,271, respectively, were recorded as Other Long-Term Assets. Accounts Receivable and Allowance for Doubtful Accounts The Company’s accounts receivable on the consolidated balance sheets as of December 29, 2019 and December 30, 2018 are primarily from contracts with customers. In the year ended December 30, 2018, the Company recorded a bad debt charge of approximately $49,000 related to Toys“R”Us. In the year ended December 31, 2017, the Company recorded a bad debt charge of approximately $18,000 related to Toys"R"Us. The Company had no other material bad debt expense in the years ended December 29, 2019, December 30, 2018, or December 31, 2017. Disaggregation of revenues The Company disaggregates its revenues from contracts with customers by segment: US and Canada, International, Entertainment, Licensing and Digital, and Global Operations. 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 four brand categories: Franchise Brands, Partner Brands, Hasbro Gaming, and Emerging Brands. We believe these collectively depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. See note 21, for further information.
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Other Comprehensive Earnings (Loss) (Tables) |
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Tax Effect in Statement of Comprehensive Income | The following table presents the related tax effects on changes in other comprehensive earnings (loss) for each of the three fiscal years ended December 29, 2019.
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Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in the components of accumulated other comprehensive earnings (loss), net of tax are as follows:
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Accrued Liabilities (Tables) |
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Accrued Liabilities, Current [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities | Components of accrued liabilities for the fiscal years ended on December 29, 2019 and December 30, 2018 are as follows:
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Restructuring Actions |
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Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||||||||
Restructuring Actions | Restructuring Actions During 2018, the Company announced a comprehensive restructuring plan which consists 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 reimagine 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 restructuring actions during 2019 including 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 the first quarter of 2018, the Company recorded a pre-tax severance expense of $17,349, primarily outside of the U.S., related to the 2018 restructuring program. During the fourth quarter of 2018, the Company recorded an additional $72,000 of pre-tax severance charges related to the program. These charges were included within selling, distribution and administration costs on the Consolidated Statements of Operations for the year ended December 30, 2018 and reported within Corporate and Eliminations. No additional charges were taken in 2019. The detail of activity related to the program is as follows:
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Pension, Postretirement and Postemployment Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension, Postretirement and Postemployment Benefits | Pension, Postretirement and Postemployment Benefits Pension and Postretirement Benefits The Company recognizes an asset or liability for each of its defined benefit pension plans equal to the difference between the projected benefit obligation of the plan and the fair value of the plan’s assets. Actuarial gains and losses and prior service costs that have not yet been included in income are recognized in the consolidated balance sheets in AOCE. Prior to 2018 reclassifications to earnings from AOCE related to pension and postretirement plans were recorded to selling, distribution and administration expense. As a result of the adoption of ASU 2017-7 (see note 1) in 2018, reclassifications to earnings from AOCE related to pension and postretirement plans were recorded to other (income) expense in 2019 and 2018. Expenses related to the Company’s defined benefit pension and defined contribution plans for 2019, 2018 and 2017 were approximately $48,400, $41,900 and $45,900, respectively. Of these amounts, $35,100, $32,300 and $36,000, respectively, related to defined contribution plans in the United States and certain international subsidiaries. The remainder of the expense relates to defined benefit pension plans discussed below. United States Plans Prior to 2008, substantially all United States employees were covered under at least one of several non-contributory defined benefit pension plans maintained by the Company. Benefits under the two major plans which principally covered non-union employees, were based primarily on salary and years of service. Benefits under the remaining plans are based primarily on fixed amounts for specified years of service. In 2007, for the two major plans covering its non-union employees, the Company froze benefits being accrued effective at the end of December 2007. Following the August 2015 sale of its manufacturing facility in East Longmeadow, MA, the Company elected to freeze benefits related to its major plan covering union employees. Effective January 1, 2016, the plan covering union employees merged with and into the Hasbro Inc. Pension Plan, and ceased to exist as a separate plan on that date. 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 (“Plan”). During the first quarter of 2018 the Company commenced the U.S. Pension Plan termination process and received regulatory approval during the fourth quarter of 2018. During the second quarter of 2019, the Company settled all remaining benefits directly with vested participants electing a lump sum payout, and purchased a group annuity contract from Massachusetts Mutual Life Insurance Company to administer all future payments to remaining U.S. Pension Plan participants. The U.S. Pension Plan's net funded asset position was sufficient to cover the lump sum payments and the purchase of the group annuity contract and settle all other remaining benefit obligations with no additional cost to the Company. After the settlement of the benefit obligations and payment of expenses, the Company had excess assets in the U.S. Pension Plan of approximately $20,234. 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, with an additional settlement charge of $185 in December 2019, related to pension losses, reclassified from accumulated other comprehensive loss to other (income) expense in the Company's consolidated statements of operations, adjusted for market conditions and settlement costs at benefit distribution. At December 29, 2019, the measurement date, the unfunded plans of the Company had an aggregate accumulated and projected benefit obligation of $30,971. There were no funded plans at December 29, 2019. At December 30, 2018, prior to the Plan termination, the fair value of the funded plans’ assets were in excess of the projected benefit obligations in the amount of $6,423 while the unfunded plans of the Company had an aggregate accumulated and projected benefit obligation of $32,072. As of December 29, 2019, the Company had unrecognized losses related to its remaining U.S. pension and post retirement plans of $13,231. Hasbro also provides certain postretirement health care and life insurance benefits to eligible employees who retired prior to January 1, 2020 and have either attained age 65 with 5 years of service or age 55 with 10 years of service. The cost of providing these benefits on behalf of employees who retired prior to 1993 has been substantially borne by the Company. The cost of providing benefits to all eligible employees who retire after 1992 is borne by the employee. The plan is not funded. During the fourth quarter of 2019, with the approval of the Compensation Committee of the Company's Board of Directors, the Company announced the elimination of the contributory postretirement health and life insurance coverage for employees whose retirement eligibility begins after December 31, 2019. Reconciliations of the beginning and ending balances for the projected benefit obligation, the fair value of plan assets and the funded status are included below for the years ended December 29, 2019 and December 30, 2018.
In fiscal 2020, the Company expects amortization of unrecognized net losses related to its defined benefit pension plans of $1,428 to be included as a component of net periodic benefit cost. The Company does not expect amortization in 2020 related to its post retirement plan. Assumptions used to determine the year-end pension and postretirement benefit obligations are as follows:
As result of the plan termination and subsequent benefit settlement actions described above, as of December 29, 2019, there are no remaining assets in the plan. The fair values of the plan assets by asset class and fair value hierarchy level (excluding assets for which the fair value is measured using net asset value per share) as of December 30, 2018 are as follows:
The Plan’s Level 1 assets consist of investments traded on active markets that are valued using published closing prices. At December 30, 2018 the Company’s investments for which the fair value was measured using net asset value per share include the following; Cash and cash equivalents—$105,600 of cash and cash equivalents which were redeemable daily and public-private investment funds—$300 consisting of a public-private investment fund which was valued using the net asset value provided by the investment manager and invests in commercial mortgage-backed securities and non-agency residential mortgage-backed securities. The Company believed that the net asset values were the best information available for use in the fair value measurement of these funds. The following is a detail of the components of the net periodic benefit cost for the three years ended December 29, 2019.
Assumptions used to determine net periodic benefit cost of the pension plan and postretirement plan for each fiscal year follow:
If the health care cost trend rate were increased one percentage point in each year, the accumulated postretirement benefit obligation at December 29, 2019 and the aggregate of the benefits earned during the period and the interest cost would have both increased by approximately 0.4%. Hasbro worked with external benefit investment specialists to assist in the development of the long-term rate of return assumptions used to model and determine the overall asset allocation. Forecast returns were based on the combination of historical returns, current market conditions and a forecast for the capital markets for the next 5-7 years. All asset class assumptions were within certain bands around the long-term historical averages. Correlations were based primarily on historical return patterns. Expected benefit payments under the defined benefit pension plans (which reflects the 2019 Plan termination) and the postretirement benefit plan for the next five years subsequent to 2019 and in the aggregate for the following five years are as follows:
International Plans Pension coverage for employees of Hasbro’s international subsidiaries is provided, to the extent deemed appropriate, through separate defined benefit and defined contribution plans. At December 29, 2019 and December 30, 2018, the defined benefit plans had total projected benefit obligations of $112,882 and $98,476, respectively, and fair values of plan assets of $84,252 and $78,184, respectively. Substantially all of the plan assets are invested in equity and fixed income securities. The pension expense related to these plans was $2,113, $2,392 and $3,473 in 2019, 2018 and 2017, respectively. In fiscal 2019, the Company expects amortization of $(33) of prior service costs, $1,803 of unrecognized net losses and $2 of unrecognized transition obligation to be included as a component of net periodic benefit cost. Expected benefit payments under the international defined benefit pension plans for the five years subsequent to 2019 and in the aggregate for the five years thereafter are as follows: 2020: $1,864; 2021: $1,965; 2022: $2,161; 2023: $2,408; 2024: $2,522; and 2024 through 2028: $15,801. Postemployment Benefits Hasbro has several plans covering certain groups of employees, which may provide benefits to such employees following their period of active employment but prior to their retirement. These plans include certain severance plans which provide benefits to employees involuntarily terminated and certain plans which continue the Company’s health and life insurance contributions for employees who have left Hasbro’s employ under terms of its long-term disability plan.
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Quarterly Financial Data (Unaudited – see accompanying accountants’ report) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
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Dec. 29, 2019 |
Sep. 29, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 30, 2018 |
Sep. 30, 2018 |
Jul. 01, 2018 |
Apr. 01, 2018 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net revenues | $ 1,428,007 | $ 1,575,173 | $ 984,537 | $ 732,510 | $ 1,389,161 | $ 1,569,686 | $ 904,458 | $ 716,341 | $ 4,720,227 | $ 4,579,646 | $ 5,209,782 |
Operating profit(a) | 190,380 | 297,210 | 128,333 | 36,127 | 10,547 | 313,336 | 87,588 | (80,419) | 652,050 | 331,052 | 810,359 |
Earnings before income taxes | 298,761 | 259,746 | 6,108 | 29,595 | (5,128) | 295,794 | 68,124 | (88,388) | 594,210 | 270,402 | |
Net earnings attributable to Hasbro, Inc. | $ 267,345 | $ 212,949 | $ 13,433 | $ 26,727 | $ 8,766 | $ 263,861 | $ 60,299 | $ (112,492) | $ 520,454 | $ 220,434 | $ 396,607 |
Net earnings (loss) | |||||||||||
Basic (in dollars per share) | $ 2.02 | $ 1.68 | $ 0.11 | $ 0.21 | $ 0.07 | $ 2.08 | $ 0.48 | $ (0.90) | $ 4.07 | $ 1.75 | $ 3.17 |
Diluted (in dollars per share) | 2.01 | 1.67 | 0.11 | 0.21 | 0.07 | 2.06 | 0.48 | (0.90) | 4.05 | 1.74 | 3.12 |
Market price | |||||||||||
High (in dollars per share) | 123.05 | 126.87 | 108.86 | 93.19 | 107.57 | 109.60 | 93.00 | 103.39 | 126.87 | 109.60 | |
Low (in dollars per share) | 92.59 | 103.04 | 84.61 | 77.34 | 76.84 | 91.70 | 79.00 | 83.56 | 77.34 | 76.84 | |
Cash dividends declared | $ 0.68 | $ 0.68 | $ 0.68 | $ 0.68 | $ 0.63 | $ 0.63 | $ 0.63 | $ 0.63 | $ 2.72 | $ 2.52 | $ 2.28 |
Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease cost | Information related to the Company's leases for the year ended December 29, 2019 is as follows:
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Maturities of operating lease liabilities | The following is a reconciliation of future undiscounted cash flows to the operating liabilities, and the related right of use assets, included in our Consolidated Balance Sheets as of December 29, 2019:
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Segment Reporting (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Information and Reconciliation by Segment | Information by segment and a reconciliation to reported amounts are as follows:
(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. Furthermore, Corporate and eliminations includes elimination of inter-company income statement transactions. Corporate and eliminations also includes the elimination of inter-company balance sheet amounts.
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Schedule of Net Revenues by International Region | The following table represents consolidated International segment net revenues by major geographic region for the three fiscal years ended December 29, 2019.
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Net revenues by product category | The following table presents consolidated net revenues by brand portfolio for the three fiscal years ended December 30, 2018.
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Schedule of Geographic Information | Information as to Hasbro’s operations in different geographical areas is presented below on the basis the Company uses to manage its business. Net revenues are categorized based on location of the customer, while long-lived assets (property, plant and equipment, goodwill and other intangibles) are categorized based on their location.
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Acquisition - Schedule of Business Acquisition (Details) - Power rangers and other entertainment assets shares in Thousands, $ in Thousands |
12 Months Ended |
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Dec. 29, 2019
USD ($)
shares
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Business Acquisition [Line Items] | |
Total Purchase Price to be allocated | $ 535,850 |
Payments to acquire businesses, gross | 152,000 |
Business combination, indemnification assets, amount as of acquisition date | 25,000 |
Deferred purchase price | 75,000 |
Business combination, consideration transferred before transaction costs and working capital adjustments | 532,397 |
Acquisition costs | 1,973 |
Other adjustment | 1,480 |
Other payments to acquire businesses | $ 22,250 |
Business acquisition, equity interest issued or issuable, number of shares | shares | 3,074 |
Common Stock | |
Business Acquisition [Line Items] | |
Market value of stock issued to seller | $ 280,397 |
Business acquisition, equity interest issued or issuable, number of shares | shares | 3,074 |
Income Taxes - Components of Earnings Before Income Taxes Determined by Tax Jurisdiction (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Income Tax Disclosure [Abstract] | |||
United States | $ 250,453 | $ 6,293 | $ 168,370 |
International | 343,757 | 264,109 | 617,780 |
Total earnings before income taxes | $ 594,210 | $ 270,402 | $ 786,150 |
Accrued Liabilities (Details) - USD ($) $ in Thousands |
Dec. 29, 2019 |
Dec. 30, 2018 |
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Accrued Liabilities, Current [Abstract] | ||
Royalties | $ 196,558 | $ 151,852 |
Advertising | 59,440 | 68,811 |
Payroll and management incentives | 85,635 | 46,472 |
Dividends | 93,067 | 79,461 |
Severance | 35,039 | 76,920 |
Deferred payment on Power Rangers Acquisition | 0 | 100,000 |
Other Taxes | 66,715 | 75,973 |
Other | 376,198 | 331,574 |
Total accrued liabilities | $ 912,652 | $ 931,063 |
Derivative Financial Instruments - Statements of Financial Performance and Financial Position (Details) - Designated as hedging instrument - USD ($) $ in Thousands |
Dec. 29, 2019 |
Dec. 30, 2018 |
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Prepaid expenses and other current assets | ||
Derivative [Line Items] | ||
Unrealized gains | $ 12,133 | $ 21,718 |
Unrealized losses | (3,955) | (972) |
Net unrealized gain (loss) | 8,178 | 20,746 |
Other assets | ||
Derivative [Line Items] | ||
Unrealized gains | 6,652 | 6,173 |
Unrealized losses | 0 | (843) |
Net unrealized gain (loss) | 6,652 | 5,330 |
Accrued liabilities | ||
Derivative [Line Items] | ||
Unrealized gains | 293 | 77 |
Unrealized losses | (2,219) | (136) |
Net unrealized gain (loss) | $ (1,926) | $ (59) |
Leases - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Lessee, Lease, Description [Line Items] | |||
Rent expense | $ 68,860 | $ 65,181 | $ 63,615 |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining lease terms | 1 year | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining lease terms | 18 years |
Goodwill and Intangibles - Schedule of Expected Amortization Expense (Details) $ in Thousands |
Dec. 29, 2019
USD ($)
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Goodwill and Intangible Assets Disclosure [Abstract] | |
2020 | $ 47,000 |
2021 | 34,000 |
2022 | 36,000 |
2023 | 27,000 |
2024 | $ 26,000 |
Commitments and Contingencies |
12 Months Ended |
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Dec. 29, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Hasbro had unused open letters of credit and related instruments of approximately $14,000 and $29,000 at December 29, 2019 and December 30, 2018, respectively. The Company enters into license agreements with strategic partners, inventors, designers and others for the use of intellectual properties in its products. Certain of these agreements contain provisions for the payment of guaranteed or minimum royalty amounts. Under terms of existing agreements as of December 29, 2019, Hasbro may, provided the other party meets their contractual commitment, be required to pay amounts as follows: 2020: $110,969; 2021: $98,550; 2022: $66,892; 2023: $153; 2024: $153; and thereafter: $459. At December 29, 2019, the Company had $67,574 of prepaid royalties, $52,869 of which are included in prepaid expenses and other current assets and $14,705 of which are included in other assets. In connection with the Company’s agreement to form a joint venture with Discovery, the Company is obligated to make future payments to Discovery under a tax sharing agreement. The Company estimates these payments may total approximately $29,300 and may range from approximately $4,700 to $6,000 per year during the period 2020 to 2024, and approximately $3,210 in aggregate for all years occurring thereafter. These payments are contingent upon the Company having sufficient taxable income to realize the expected tax deductions of certain amounts related to the joint venture. At December 29, 2019, the Company estimates payments related to inventory and tooling purchase commitments may total approximately $670,973, including contractual commitments under the manufacturing agreement with Cartamundi as follows: 2020: $120,000, 2021: $105,000, 2022: $95,000, and 2023: $85,000. Hasbro is party to certain legal proceedings, as well as certain asserted and unasserted claims. Amounts accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and in the aggregate, are not deemed to be material to the consolidated financial statements.
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Leases |
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Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02), 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. Additional 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 the balance sheet. 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. The adoption of this standard did not have a material impact on the Company's results of operations or on the Company’s cash flows. Hasbro occupies offices and uses certain equipment under various operating lease arrangements. The Company has no finance leases. The leases have remaining terms of 1 to 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 made under certain 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. Payments under such leases are expensed as incurred. The Company capitalizes non-lease components for equipment leases, but expenses non-lease components as incurred for real estate leases. The rent expense under such arrangements and similar arrangements that do not qualify as leases under ASU 2016-02, net of sublease income which is not material, for 2019, 2018 and 2017 amounted to $68,860, $65,181 and $63,615, respectively. Expense related to short term leases (expected term less than twelve months) and variable lease payments, was not material for 2019. All leases expire prior to the end of 2037. Real estate taxes, insurance and maintenance expenses are generally obligations of the Company. It is expected that, in the normal course of business, leases that expire will be renewed or replaced by leases on other properties; thus, it is anticipated that future minimum lease commitments will not be less than the amounts shown for 2019. Information related to the Company's leases for the year ended December 29, 2019 is as follows:
The following is a reconciliation of future undiscounted cash flows to the operating liabilities, and the related right of use assets, included in our Consolidated Balance Sheets as of December 29, 2019:
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Pension, Postretirement and Postemployment Benefits (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Projected Benefit Obligation, Plan Assets and Funded Status |
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Assumptions used to determine year-end pension and postretirement benefit obligations | Assumptions used to determine the year-end pension and postretirement benefit obligations are as follows:
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Fair Values of Plan Assets by Asset Class and Fair Value Hierarchy Level | The fair values of the plan assets by asset class and fair value hierarchy level (excluding assets for which the fair value is measured using net asset value per share) as of December 30, 2018 are as follows:
(a) Certain investments that are measured at fair value using the net asset value per share are not classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Schedule of Changes in Plan Assets disclosed previously in this note.
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Components of Net Periodic Benefit Cost | The following is a detail of the components of the net periodic benefit cost for the three years ended December 29, 2019.
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Assumptions Used to Determine Net Periodic Benefit Cost of Pension Plan and Postretirement Plan | Assumptions used to determine net periodic benefit cost of the pension plan and postretirement plan for each fiscal year follow:
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Schedule of Expected Benefit Payments | Expected benefit payments under the defined benefit pension plans (which reflects the 2019 Plan termination) and the postretirement benefit plan for the next five years subsequent to 2019 and in the aggregate for the following five years are as follows:
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Segment Reporting - Information and Reconciliation by Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 |
Sep. 29, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 30, 2018 |
Sep. 30, 2018 |
Jul. 01, 2018 |
Apr. 01, 2018 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Segment Reporting Information [Line Items] | |||||||||||
Revenues from External Customers | $ 1,428,007 | $ 1,575,173 | $ 984,537 | $ 732,510 | $ 1,389,161 | $ 1,569,686 | $ 904,458 | $ 716,341 | $ 4,720,227 | $ 4,579,646 | $ 5,209,782 |
Affiliate Revenue | 0 | 0 | 0 | ||||||||
Operating Profit (Loss) | 190,380 | $ 297,210 | $ 128,333 | $ 36,127 | 10,547 | $ 313,336 | $ 87,588 | $ (80,419) | 652,050 | 331,052 | 810,359 |
Depreciation and Amortization | 180,787 | 167,958 | 171,836 | ||||||||
Capital Additions | 133,636 | 140,426 | 134,877 | ||||||||
Total Assets | 8,855,628 | 5,262,988 | 8,855,628 | 5,262,988 | 5,289,983 | ||||||
Corporate and eliminations | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues from External Customers | 0 | 0 | 0 | ||||||||
Affiliate Revenue | (1,411,378) | (1,465,620) | (1,675,078) | ||||||||
Operating Profit (Loss) | 36,861 | (99,327) | (28,666) | ||||||||
Depreciation and Amortization | 76,051 | 60,923 | 44,731 | ||||||||
Capital Additions | 23,640 | 20,976 | 27,103 | ||||||||
Total Assets | (901,580) | (3,684,323) | (901,580) | (3,684,323) | (3,405,347) | ||||||
U.S. and Canada | Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues from External Customers | 2,449,280 | 2,375,653 | 2,650,682 | ||||||||
Affiliate Revenue | 11,016 | 10,242 | 8,157 | ||||||||
Operating Profit (Loss) | 415,436 | 370,197 | 523,915 | ||||||||
Depreciation and Amortization | 8,696 | 11,119 | 19,457 | ||||||||
Capital Additions | 6,280 | 5,255 | 5,849 | ||||||||
Total Assets | 3,244,950 | 2,899,986 | 3,244,950 | 2,899,986 | 2,746,834 | ||||||
International | Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues from External Customers | 1,836,360 | 1,847,585 | 2,233,579 | ||||||||
Affiliate Revenue | 273 | 290 | 382 | ||||||||
Operating Profit (Loss) | 107,304 | 39,470 | 228,669 | ||||||||
Depreciation and Amortization | 6,166 | 6,530 | 9,527 | ||||||||
Capital Additions | 4,290 | 4,652 | 4,669 | ||||||||
Total Assets | 2,482,170 | 2,229,053 | 2,482,170 | 2,229,053 | 2,499,985 | ||||||
Entertainment, Licensing and Digital | Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues from External Customers | 434,467 | 356,299 | 325,424 | ||||||||
Affiliate Revenue | 11,466 | 15,796 | 21,889 | ||||||||
Operating Profit (Loss) | 99,686 | 29,127 | 82,427 | ||||||||
Depreciation and Amortization | 8,342 | 4,627 | 5,526 | ||||||||
Capital Additions | 25,718 | 26,631 | 7,637 | ||||||||
Total Assets | 695,898 | 620,425 | 695,898 | 620,425 | 628,743 | ||||||
Global Operations | Operating Segments | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues from External Customers | 120 | 109 | 97 | ||||||||
Affiliate Revenue | 1,388,623 | 1,439,292 | 1,644,650 | ||||||||
Operating Profit (Loss) | (7,237) | (8,415) | 4,014 | ||||||||
Depreciation and Amortization | 81,532 | 84,759 | 92,595 | ||||||||
Capital Additions | 73,708 | 82,912 | 89,619 | ||||||||
Total Assets | $ 3,334,190 | $ 3,197,847 | $ 3,334,190 | $ 3,197,847 | $ 2,819,768 |
Restructuring Actions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 29, 2019 | |||||||||||||||||||||||||||||||||||||
Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of restructuring and related costs | The detail of activity related to the program is as follows:
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Leases - Lease Cost (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 29, 2019
USD ($)
| |
Leases [Abstract] | |
Operating cash flows from operating leases | $ 37,653 |
Right-of-use assets obtained in exchange for lease obligations, operating leases | $ 30,573 |
Weighted average remaining lease term, operating leases | 6 years 2 months 12 days |
Weighted average discount rate, operating lease | 4.50% |
Acquisition - Narrative (Details) - USD ($) $ in Thousands |
1 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 29, 2019 |
Oct. 31, 2019 |
May 31, 2019 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Business Acquisition [Line Items] | ||||||
Payments to Acquire Businesses, Net of Cash Acquired | $ 8,761 | $ 155,451 | $ 0 | |||
Pension Settlement | $ 185 | $ 110,777 | 110,962 | 0 | 0 | |
Goodwill | 494,584 | 494,584 | 485,881 | 573,063 | ||
Program production costs | 33,851 | $ 131,984 | $ 48,003 | |||
Tuque Games | ||||||
Business Acquisition [Line Items] | ||||||
Payments to Acquire Businesses, Net of Cash Acquired | $ 8,761 | |||||
Power rangers and other entertainment assets | ||||||
Business Acquisition [Line Items] | ||||||
Total purchase price to be allocated | 535,850 | |||||
Finite-lived intangible assets acquired | $ 534,370 | |||||
Finite-lived intangible assets, remaining amortization period | 25 years | |||||
Other assets, current | 7,884 | $ 7,884 | ||||
Program production costs | 325 | |||||
Other liabilities, current | $ 6,729 | 6,729 | ||||
Payments to acquire businesses, gross | $ 152,000 |
Income Taxes - Income Taxes Attributable to Earnings Before Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Current | |||
United States | $ 41,355 | $ 12,805 | $ 202,374 |
State and local | 5,528 | 5,644 | 2,926 |
International | 41,829 | 42,613 | 72,138 |
Current income tax expense (benefit) | 88,712 | 61,062 | 277,438 |
Deferred | |||
United States | (20,139) | (4,937) | 105,174 |
State and local | (1,438) | (471) | 1,658 |
International | 6,621 | (5,686) | 5,273 |
Deferred income tax expense (benefit) | (14,956) | (11,094) | 112,105 |
Income tax expense (benefit) | $ 73,756 | $ 49,968 | $ 389,543 |
Goodwill and Intangibles - Schedule of Goodwill (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2018 |
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Goodwill [Roll Forward] | ||||
Beginning goodwill | $ 485,881,000 | $ 573,063,000 | ||
Acquired during the period | 9,117,000 | |||
Impairment during the period | $ (86,253,000) | 0 | (86,253,000) | $ 0 |
Foreign exchange translation | (414,000) | (929,000) | ||
Ending goodwill | 485,881,000 | 494,584,000 | 485,881,000 | 573,063,000 |
U.S. and Canada | ||||
Goodwill [Roll Forward] | ||||
Beginning goodwill | 296,978,000 | 296,978,000 | ||
Acquired during the period | 0 | |||
Impairment during the period | (5,401,000) | 0 | ||
Foreign exchange translation | 0 | 0 | ||
Ending goodwill | 296,978,000 | 291,577,000 | 296,978,000 | 296,978,000 |
International | ||||
Goodwill [Roll Forward] | ||||
Beginning goodwill | 170,361,000 | 170,699,000 | ||
Acquired during the period | 0 | |||
Impairment during the period | 0 | 0 | ||
Foreign exchange translation | (143,000) | (338,000) | ||
Ending goodwill | 170,361,000 | 170,218,000 | 170,361,000 | 170,699,000 |
Entertainment, Licensing and Digital | ||||
Goodwill [Roll Forward] | ||||
Beginning goodwill | 18,542,000 | 105,386,000 | ||
Acquired during the period | 9,117,000 | |||
Impairment during the period | 5,401,000 | (86,253,000) | ||
Foreign exchange translation | (271,000) | (591,000) | ||
Ending goodwill | $ 18,542,000 | $ 32,789,000 | $ 18,542,000 | $ 105,386,000 |
Pension, Postretirement and Postemployment Benefits - Assumptions used to determine Net Periodic Benefit Cost of Pension Plan and Postreitrement Plan (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Pension | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Weighted average discount rate | 3.72% | 3.71% | 4.22% |
Long-term rate of return on plan assets | 4.20% | 4.75% | 6.25% |
Postretirement | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Weighted average discount rate | 4.33% | 3.74% | 4.26% |
Health care cost trend rate assumed for next year | 6.25% | 6.50% | 7.00% |
Rate to which the cost trend rate is assumed to decline (ultimate trend rate) | 5.00% | 5.00% | 5.00% |
Income Taxes - Effective Income Tax Rate Reconciliation (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | |||
Statutory income tax rate | 21.00% | 21.00% | 35.00% |
State and local income taxes, net | 0.50% | 1.50% | 0.30% |
Tax on international earnings | (4.60%) | (11.40%) | (23.00%) |
Change in unrecognized tax benefits | 0.60% | (7.90%) | 1.00% |
Share-based compensation | (0.80%) | (4.00%) | (4.10%) |
Tax Cuts and Jobs Act of 2017 | 0.00% | 15.00% | 39.40% |
Research and development tax credits | (0.70%) | (1.90%) | (0.50%) |
Non-deductible goodwill impairment | 0.00% | 2.00% | 0.00% |
Gains on integrated hedging instruments | (4.00%) | 0.00% | 0.00% |
Other, net | 0.40% | 4.20% | 1.50% |
Effective income tax rate, continuing operations | 12.40% | 18.50% | 49.60% |
Capital Stock (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Nov. 30, 2019 |
Dec. 29, 2019 |
Dec. 29, 2019 |
May 31, 2018 |
|
Class of Stock [Line Items] | ||||
Common stock, shares issued (in shares) | 10,592,000 | 10,592,000 | ||
Sale of stock (in dollars per share) | $ 95.00 | $ 95.00 | $ 95.00 | |
Stock repurchase program, authorized amount | $ 500,000,000 | |||
Number of shares repurchased (in shares) | 702,000 | |||
Treasury stock acquired, average cost per share (in dollars per share) | $ 87.41 | |||
Purchases of common stock | $ 61,387,000 | |||
Stock repurchase program, remaining authorized repurchase amount | $ 366,593,000 | 366,593,000 | ||
Term Loan Agreement | Unsecured Debt | ||||
Class of Stock [Line Items] | ||||
Debt instrument, face amount | $ 975,185,000 | $ 1,000,000,000 | $ 1,000,000,000 |
Financing Arrangements |
12 Months Ended |
---|---|
Dec. 29, 2019 | |
Debt Disclosure [Abstract] | |
Financing Arrangements | Financing Arrangements At December 29, 2019, Hasbro had available an unsecured committed line and unsecured uncommitted lines of credit from various banks approximating $1,100,000 and $141,000, respectively. Substantially all of the short term borrowings outstanding at the end of 2019 and 2018 represent borrowings made under, or supported by, these lines of credit. Borrowings under the lines of credit were made by certain international affiliates of the Company on terms and at interest rates generally extended to companies of comparable creditworthiness in those markets. The weighted average interest rates of the outstanding borrowings under the uncommitted lines of credit as of December 29, 2019 and December 30, 2018 were 16.00% and 3.92%, respectively. The Company had no borrowings outstanding under its committed line of credit at December 29, 2019. During 2019, Hasbro’s working capital needs were fulfilled by cash available and cash generated from operations. During the third and fourth quarters of 2019, in preparation for the Company's acquisition of eOne, the Company completed the following debt and equity financings: (i) the issuance of senior unsecured notes in an aggregate principal amount of $2,375,000, (ii) the issuance of 10,592 shares of common stock at a public offering price of $95.00 per share and (iii) $1,000,000 in term loans provided by a Term Loan Agreement (the “Term Loan Agreement”) entered into with Bank of America, N.A., as administrative agent, and certain financial institutions, as lenders, pursuant to which such lenders committed to provide, contingent on completion of the eOne acquisition and certain other customary conditions to funding, facilities consisting of a three-year senior unsecured term loan facility in an aggregate principal amount of $400,000 and a five-year senior unsecured term loan facility in an aggregate principal amount of $600,000. See note 10 for further discussion on the Term Loan Agreement and note 22 for further discussion on the eOne acquisition. During the third quarter of 2019, the Company entered into a second amended and restated revolving credit agreement with Bank of America, as administrative agent, swing line lender and a letter of credit issuer and lender and certain other financial institutions, as lenders thereto (the "Amended Revolving Credit Agreement"), which provides the Company with commitments having a maximum aggregate principal amount of $1,500,000, comprised of (1) $1,100,000 of commitments effective as of September 20, 2019, and (2) $400,000 of commitments that became effective upon completion of the acquisition of eOne on December 30, 2019. Upon the $400,000 of commitments becoming effective, the term of the Amended Revolving Credit Agreement was extended through September 20, 2024. 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 $400,000 subject to agreement of the lenders. Prior to the September 2019 amendment, the Amended 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 December 29, 2019. The Company had no borrowings outstanding under its committed revolving credit facility as of December 29, 2019. The Company pays a commitment fee (0.10% as of December 29, 2019) based on the unused portion of the revolving credit facility and interest equal to a Base Rate or Eurocurrency Rate plus a spread on borrowings under the facility. The Base Rate is determined based on either the Federal Funds Rate plus a spread, or Prime Rate plus a spread. The commitment fee and the amount of the spread to the Base Rate or Eurocurrency Rate both vary based on the Company’s long-term debt ratings and the Company’s leverage. At December 29, 2019, the interest rate under the revolving credit facility was equal to Eurocurrency Rate plus 1.125%. The Company has an agreement with a group of banks providing a commercial paper program (the “Program”). Under the Program, at the Company’s request the banks may either purchase from the Company, or arrange for the sale by the Company of, unsecured commercial paper notes. Borrowings under the Program are supported by the aforementioned unsecured committed line of credit and the Company may issue notes from time to time up to an aggregate principal amount outstanding at any given time of $1,000,000. The maturities of the notes may vary but may not exceed 397 days. Subject to market conditions, the notes will be sold under customary terms in the commercial paper market and will be issued at a discount to par, or alternatively, will be sold at par and will bear varying interest rates based on a fixed or floating rate basis. The interest rates will vary based on market conditions and the ratings assigned to the notes by the credit rating agencies at the time of issuance. At December 29, 2019 and December 30, 2018 the Company did not have any notes outstanding under the Program.
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Property, Plant and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, Plant and Equipment
Expenditures for maintenance and repairs which do not materially extend the life of the assets are charged to operations as incurred. In 2019, 2018 and 2017 the Company recorded $133,528, $139,255 and $143,018, respectively, of depreciation expense. See note 16 for additional discussion on right of use assets.
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Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Preparation of Consolidated Financial Statements The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and notes thereto. Actual results could differ from those estimates. Principles of Consolidation The consolidated financial statements include the accounts of Hasbro, Inc. and all majority-owned subsidiaries (“Hasbro” or the “Company”). Investments representing 20% to 50% ownership interests in other companies are accounted for using the equity method. For those majority-owned subsidiaries that are not 100% owned by Hasbro, the interests of the minority owners are accounted for as noncontrolling interests. At December 29, 2019, the Company had no majority-owned subsidiaries. All intercompany balances and transactions have been eliminated. Fiscal Year Hasbro’s fiscal year ends on the last Sunday in December. The fiscal years ended December 29, 2019 and December 30, 2018 were fifty-two week periods while the year ended December 31, 2017 was a fifty-three week period. Cash and Cash Equivalents Cash and cash equivalents include all cash balances and highly liquid investments purchased with an initial maturity to the Company of three months or less. Marketable Securities Included in marketable securities are investments in private investment funds. These investments are included in prepaid expenses and other current assets in the accompanying consolidated balance sheets, and, due to the nature and business purpose of these investments, the Company has selected the fair value option which requires the Company to record the unrealized gains and losses on these investments in the consolidated statements of operations at the time they occur. Marketable securities also include common stock in a public company arising from a business relationship. This type of investment is also included in prepaid expenses and other current assets in the accompanying consolidated balance sheets; however, due to its nature and business purpose, the Company records unrealized gains and losses in accumulated other comprehensive loss in the consolidated balance sheets until it is sold or the decline in value is deemed to be other than temporary, at which point the gains or losses will be recognized in the consolidated statements of operations. Accounts Receivable and Allowance for Doubtful Accounts Credit is granted to customers predominantly on an unsecured basis. Credit limits and payment terms are established based on extensive evaluations made on an ongoing basis throughout the fiscal year with regard to the financial performance, cash generation, financing availability and liquidity status of each customer. The majority of customers are formally reviewed at least annually; more frequent reviews are performed based on the customer’s financial condition and the level of credit being extended. For customers on credit who are experiencing financial difficulties, management performs additional financial analyses before shipping orders. The Company uses a variety of financial transactions, based on availability and cost, to increase the collectability of certain of its accounts, including letters of credit, credit insurance, and requiring cash in advance of shipping. The Company records an allowance for doubtful accounts based on management’s assessment of the business environment, customers’ financial condition, historical collection experience, accounts receivable aging and customer disputes. Accounts receivable, net on the consolidated balance sheet represents amounts due from customers less the allowance for doubtful accounts as well as allowances for discounts, rebates and returns. In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (ASU 2016-13) Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments. The amendments in this update provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The standard update replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company has evaluated the requirements of ASU 2016-13 and currently does not expect the standard to have a material impact on its consolidated financial statements. Inventories Inventories are valued at the lower of cost (first-in, first-out) or net realizable value. Based upon a consideration of quantities on hand, actual and projected sales volume, anticipated product selling price and product lines planned to be discontinued, slow-moving and obsolete inventory is written down to its estimated net realizable value. At both December 29, 2019 and December 30, 2018, substantially all inventory is comprised of finished goods. Equity Method Investment For the Company’s equity method investments, only the Company’s investment in and amounts due to and from the equity method investment are included in the consolidated balance sheets and only the Company’s share of the equity method investment’s earnings (losses) is included in other (income) expense, net in the consolidated statements of operations. Dividends, cash distributions, loans or other cash received from the equity method investment, additional cash investments, loan repayments or other cash paid to the investee are included in the consolidated statements of cash flows. The Company reviews its equity method investments for impairment on a periodic basis. If it has been determined that the fair value of the equity investment is less than its related carrying value and that this decline is other-than-temporary, the carrying value of the investment is adjusted downward to reflect these declines in value. The Company has one significant equity method investment, its 40% interest in a joint venture with Discovery Communications, Inc. (“Discovery”). The Company and Discovery are party to an option agreement with respect to this joint venture. The Company has recorded a liability for this option agreement at fair value which is included in other liabilities in the consolidated balance sheets. Unrealized gains and losses on this option are recognized in the consolidated statements of operations as they occur. See notes 6 and 13 for additional information. Property, Plant and Equipment, Net Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using accelerated and straight-line methods to depreciate the cost of property, plant and equipment over their estimated useful lives. The principal lives, in years, used in determining depreciation rates of various assets are: land improvements 15 to 19, buildings and improvements 15 to 25 and machinery and equipment (including computer hardware and software) 3 to 12. Depreciation expense is classified in the consolidated statements of operations based on the nature of the property and equipment being depreciated. Tools, dies and molds are depreciated over a three-year period or their useful lives, whichever is less, using an accelerated method. The Company generally owns all tools, dies and molds related to its products. Property, plant and equipment, net is reviewed for impairment whenever events or circumstances indicate the carrying value may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the asset or related asset group to future undiscounted cash flows expected to be generated by the asset or asset group. If such assets are considered to be impaired, the impairment to be recognized would be measured by the amount by which the carrying value of the assets exceeds their fair value wherein the fair value is the appraised value. Furthermore, assets to be disposed of are carried at the lower of the net book value or their estimated fair value less disposal costs. Goodwill and Other Intangible Assets, Net Goodwill results from acquisitions the Company has made over time. Substantially all of the Company's other intangible assets consist of the cost of acquired product rights. In establishing the value of such rights, the Company considers existing trademarks, copyrights, patents, license agreements and other product-related rights. These rights were valued on their acquisition dates based on the anticipated future cash flows from the underlying product lines. The Company has certain intangible assets related to the Tonka and Milton Bradley acquisitions that have indefinite lives. Goodwill and intangible assets deemed to have indefinite lives are not amortized and are tested for impairment at least annually. The annual goodwill test begins with a qualitative assessment, where qualitative factors and their impact on critical inputs are assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the Company determines that a reporting unit has an indication of impairment based on the qualitative assessment, it is required to perform a quantitative assessment. Prior to the adoption of Accounting Standards Update No. 2017-04 ("ASU 2017-04"), the quantitative assessment consisted of a two-step process beginning with an estimation of fair value of the reporting unit using an income approach, which looked to the present value of expected future cash flows. The first step was a screen for potential impairment while the second step was to determine the implied fair value of the goodwill and compare it to its carrying amount on the balance sheet. Under ASU 2017-04, the Step 2 test was eliminated. As a result, once it has been determined that the carrying amount of a reporting unit exceeds its fair value, the excess carrying amount is recognized as an impairment loss. During the fourth quarter of 2019, the Company performed a qualitative assessment with respect to goodwill associated with its reporting units and determined that it was not necessary to perform a quantitative assessment for the goodwill of the reporting units. During the fourth quarter of 2018, the Company recorded a non-cash impairment charge of $86,253 within administrative expense and in the Company’s Entertainment, Licensing and Digital segment, which was the full amount of remaining goodwill associated with the Backflip reporting unit. See further discussion in note 5. Based on its qualitative assessment of goodwill for all reporting units with the exception of Backflip, the company concluded there was no other impairment of goodwill during 2018. During the fourth quarter of 2017, and prior to the adoption of ASU 2017-04 which eliminated the Step 2 test from the impairment testing process, the Company performed a qualitative assessment with respect to goodwill associated with all but two of its reporting units and determined that it was not necessary to perform a quantitative assessment for the goodwill of these reporting units. The Company performed the first step of the quantitative two-step annual impairment test on the goodwill associated with Backflip and on the goodwill associated with the Company’s Entertainment reporting unit. As a result of the 2017 assessment the Company concluded that no impairments were indicated as the estimated fair values were in excess of the carrying values of the related reporting units. The remaining intangible assets having definite lives are being amortized over periods ranging from two to twenty-five years, primarily using the straight-line method. The Company reviews other intangible assets with definite lives for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the asset to future undiscounted cash flows expected to be generated by the asset or asset group. If such assets were considered to be impaired, the impairment to be recognized would be measured by the amount by which the carrying value of the assets exceeds their fair value wherein that fair value is determined based on discounted cash flows. In 2019 and 2017 there were no intangible asset impairments recorded. In the fourth quarter of 2018, the Company recorded non-cash impairments of $31,303. See further discussion in note 5. Financial Instruments Hasbro’s financial instruments include cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable and certain accrued liabilities. At December 29, 2019, the carrying cost of these instruments approximated their fair value. The Company’s financial instruments at December 29, 2019 also include long-term borrowings (see note 10 for carrying cost and related fair values) as well as certain assets and liabilities measured at fair value (see notes 13 and 17). Revenue Recognition Revenue is recognized when control of the promised goods 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. 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. On January 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606 or the “New Revenue Standard”) using the modified retrospective method. ASC 606 superseded the revenue recognition requirements in ASC 605 – Revenue Recognition and most industry-specific guidance in U.S. GAAP. The New Revenue Standard provides a five-step model for analyzing contracts and transactions to determine when, how, and if revenue is recognized. Revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The cumulative impact of the adoption of the New Revenue Standard was not material to the Company therefore the Company did not record any adjustments to retained earnings. This was determined by analyzing contracts not completed as of January 1, 2018. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. For further details, see note 2 for further discussion. Revenue recognition from the sale of finished products to customers, which is the majority of the Company’s revenues, did not change under the new standard and the Company does not expect material changes in the future as a result of the New Revenue Standard related to the sale of finished products to its customers. Within the Company’s Entertainment, Licensing and Digital segment, the timing of revenue recognition for minimum guarantees that the Company receives from licensees was impacted by the New Revenue Standard. Prior to the adoption of ASC 606, for licenses of the Company’s brands that are subject to minimum guaranteed license fees, the Company recognized the difference between the minimum guaranteed amount and the actual royalties earned from licensee merchandise sales (“shortfalls”) at the end of the contract period, which was in the fourth quarter for most of the Company’s licensee arrangements. In periods following January 1, 2018, minimum guaranteed amounts are being recognized on a straight-line basis over the license period. While the impact of this change is not material to full year revenues, it impacts the timing of revenue recognition within the Company’s Entertainment, Licensing and Digital segment such that under ASC 606, less revenues are recorded in the fourth quarter and more revenues are recorded within the first, second, and third quarters. No other areas of the Company’s business were materially impacted by the New Revenue Standard. The majority of the Company’s revenues are derived from sales of finished products to customers. Revenues from sales of finished products to customers accounted for 91%, 92% and 94% of the Company’s revenues for the years ended December 29, 2019, December 30, 2018 and December 31, 2017, respectively. When determining whether control of the finished products has transferred to the customer, the Company considers any future performance obligations. Generally, the Company has no post-shipment obligation on sales of finished products to customers and revenues from product sales are recognized upon passing of title to the customer, which is generally at the time of shipment. Any shipping and handling activities that are performed by the Company, whether before or after a customer has obtained control of the products, are considered activities to fulfill our obligation to transfer the products, and are recorded as incurred within selling, distribution, and administration expenses. The Company offers various discounts, rebates, allowances, returns, and markdowns to its customers (collectively, “allowances”), all of which are considered when determining the transaction price. Certain allowances are fixed and determinable at the time of sale and are recorded at the time of sale as a reduction to revenues. Other allowances can vary depending on future outcomes such as customer sales volume (“variable consideration”). The Company estimates the amount of variable consideration using the expected value method. In estimating the amount of variable consideration using the expected value method, the Company considers various factors including but not limited to: customer terms, historical experience, any expected deviations from historical experience, and existing or expected market conditions. The Company then records an estimate of variable consideration as a reduction to revenues at the time of sale. The Company adjusts its estimate of variable consideration at least quarterly or when facts and circumstances used in the estimation process may change. Historically, adjustments to estimated variable consideration have not been material. The Company enters into contracts to license its intellectual property, which consists of its brands, in various channels including but not limited to: consumer products such as apparel or home goods, within formats such as on-line games, within venues such as theme parks, or within formats such as motion picture films. The licensees pay the Company either a sales-based or usage-based royalty, or a combination of both, for use of the brands, in some cases subject to minimum guaranteed amounts or fixed fees. The license of the Company’s brands provide access to the intellectual property over the term of the license, generally without any other performance obligation of the Company other than keeping the intellectual property active, and is therefore considered a right-to-access license of symbolic intellectual property. The Company records sales-based or usage-based royalty revenues for right-to-access licenses at the occurrence of the licensees’ subsequent sale or usage. When the arrangement includes a minimum guarantee, the Company records the minimum guarantee on a ratable basis over the term of the license period and does not record the sales-based or usage-based royalty revenues until they exceed the minimum guarantee. The Company also produces television or streaming programming for licensing to third parties. The licensees typically pay a fixed fee for the license of the produced content. The content that the Company delivers to its licensees has stand-alone functionality, generally without any other performance obligation of the Company, and is therefore considered a right-to-use license of functional intellectual property. The Company records revenues for right-to-use licenses once the license period has commenced and the licensee has the ability to use the delivered content. In arrangements where the licensee pays the Company a fixed fee for multiple seasons or multiple series of programming, arrangement fees are recorded as revenues based upon their relative fair values. The Company also develops application based digital games featuring its brands within the games. These games are hosted primarily by third-party platform providers. The Company does not charge a fee to the end users for the download of the games or the ability to play the games. The end users make in-application purchases of virtual currencies, via the Company’s platform providers, with such purchased virtual currencies to be used in the games. The Company records revenues from in-application purchases based on either the usage patterns of the players or the player’s estimated life. The Company’s digital game’s revenues are currently recognized within six months of purchase. The Company controls all aspects of the digital goods delivered to the consumer. The third-party platform providers are providing only the service of hosting and administering transactions from the end users. In some cases, the Company is the principal in the arrangement and records the gross revenues within Net Revenues in our Consolidated Statements of Operations. The fees charged by the third-party platform providers to the Company are recorded within cost of sales. In other cases, the Company is an agent in the arrangement and records the revenues, net of related fees, within Net Revenues in our Consolidated Statements of Operations. Costs of Sales Cost of sales primarily consists of purchased materials, labor, tooling, manufacturing overheads and other inventory-related costs such as obsolescence. Royalties The Company enters into license agreements with strategic partners, inventors, designers and others for the use of intellectual properties in its products. These agreements may call for payment in advance or future payment of minimum guaranteed amounts. Amounts paid in advance are recorded as an asset and charged to expense when the related revenue is recognized in the consolidated statements of operations. If all or a portion of the minimum guaranteed amounts appear not to be recoverable through future use of the rights obtained under the license, the non-recoverable portion of the guaranty is charged to expense at that time. Advertising Production costs of commercials are expensed in the fiscal year during which the production is first aired. The costs of other advertising and promotion programs are expensed in the fiscal year incurred. Program Production Costs The Company incurs costs in connection with the production of television programming and motion pictures. These costs are capitalized by the Company as they are incurred and amortized using the individual-film-forecast method, whereby these costs are amortized in the proportion that the current year’s revenues bear to management’s estimate of total ultimate revenues as of the beginning of such period related to the program. These capitalized costs are reported at the lower of cost, less accumulated amortization, or fair value, and reviewed for impairment when an event or change in circumstances occurs that indicates that impairment may exist. The fair value is determined using a discounted cash flow model which is primarily based on management’s future revenue and cost estimates. In March 2019, the FASB issued Accounting Standards Update No. 2019-02 (ASU 2019-02) Entertainment-Films-Other Assets-Film Costs (Subtopic 926-20) and Entertainment-Broadcasters-Intangibles-Goodwill and Other (Subtopic 920-350) - Improvements to Accounting for Costs of Films and License Agreements for Program Materials. The amendments in this update align cost capitalization of episodic television series production costs with that of film production cost capitalization. In addition, this update addresses impairment testing procedures with regard to film groups, when a film or license agreement is expected to be monetized with other films and/or license agreements. The intention of this update is to align accounting treatment with changes in production and distribution models within the entertainment industry and to provide increased transparency of information provided to users of financial statements about produced and licensed content. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company has evaluated the standard and does not expect the standard to materially impact its consolidated financial statements. Shipping and Handling Hasbro expenses costs related to the shipment and handling of goods to customers as incurred. For 2019, 2018 and 2017, these costs were $218,742, $206,307 and $190,999, respectively, and are included in selling, distribution and administration expenses. Operating Leases Prior to 2019 Hasbro recorded lease expense on a straight-line basis inclusive of rent concessions and increases. Reimbursements from lessors for leasehold improvements were deferred and recognized as a reduction to lease expense over the remaining lease term. In February 2016, the FASB issued 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 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 provided 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 $121,230 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 16. Income Taxes Hasbro uses the asset and liability approach for financial accounting and reporting of income taxes. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred taxes are measured using rates expected to apply to taxable income in years in which those temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company uses a two-step process for the measurement of uncertain tax positions that have been taken or are expected to be taken in a tax return. The first step is a determination of whether the tax position should be recognized in the consolidated financial statements. The second step determines the measurement of the tax position. The Company records potential interest and penalties on uncertain tax positions as a component of income tax expense. Foreign Currency Translation Foreign currency assets and liabilities are translated into U.S. dollars at period-end exchange rates, and revenues, costs and expenses are translated at weighted average exchange rates during each reporting period. Net earnings include gains or losses resulting from foreign currency transactions and, when required, translation gains and losses resulting from the use of the U.S. dollar as the functional currency in highly inflationary economies. Other gains and losses resulting from translation of financial statements are a component of other comprehensive earnings (loss). Pension Plans, Postretirement and Postemployment Benefits Pension expense and related amounts in the consolidated balance sheets are based on actuarial computations of current and future benefits. Actual results that differ from the actuarial assumptions are accumulated and, if outside a certain corridor, amortized over future periods and, therefore affect recognized expense in future periods. The corridor used for this purpose is equal to 10% of the greater of plan liabilities or market asset values, and future periods vary by plan, but generally equal the actuarially determined average expected future working lifetime of active plan participants. The Company’s policy is to fund amounts which are required by applicable regulations and which are tax deductible. The estimated amounts of future payments to be made under other retirement programs are being accrued currently over the period of active employment and are also included in pension expense. Hasbro has a contributory postretirement health and life insurance plan covering substantially all employees who retired under any of its United States defined benefit pension plans prior to January 1, 2020, and meet certain age and length of service requirements. During the fourth quarter of 2019, with the approval of the Compensation Committee of the Company's Board of Directors, the Company announced the elimination of the contributory postretirement health and life insurance coverage for employees whose retirement eligibility begins after December 31, 2019 (See note 15). The cost of providing these benefits on behalf of employees who retired prior to 1993 has been substantially borne by the Company. The cost of providing benefits on behalf of eligible employees who retire after 1992 is borne by the employee. It also has several plans covering certain groups of employees, which may provide benefits to such employees following their period of employment but prior to their retirement. The Company measures the costs of these obligations based on actuarial computations. In March 2017, the FASB issued Accounting Standards Update No. 2017-7 (ASU 2017-7), Compensation –Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The standard requires companies to present the service cost component of net benefit cost in the income statement line items where they report compensation cost. Companies will present all other components of net benefit cost outside operating income, if this subtotal is presented. For public companies, this standard was effective for annual reporting periods beginning after December 15, 2017, and early adoption was permitted. The Company adopted this standard January 1, 2018 and the adoption of this standard did not have a material impact on the Company’s results or consolidated financial statements in the fiscal years ended December 29, 2019 and December 30, 2018. 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. Upon settlement of the pension liability, which occurred in May 2019, the Company recognized a non-operating settlement charge of $110,777, and an additional settlement charge of $185 in December 2019, related to pension losses, reclassified from accumulated other comprehensive loss to other (income) expense in the Company's consolidated statements of operations, adjusted for market conditions and settlement costs at benefit distribution. Stock-Based Compensation The Company has a stock-based employee compensation plan for employees and non-employee members of the Company’s Board of Directors. Under this plan the Company may grant stock options at or above the fair market value of the Company’s stock, as well as restricted stock, restricted stock units and contingent stock performance awards. All awards are measured at fair value at the date of the grant and amortized as expense on a straight-line basis over the requisite service period of the award. For awards contingent upon Company performance, the measurement of the expense for these awards is based on the Company’s current estimate of its performance over the performance period. See note 14 for further discussion. Risk Management Contracts Hasbro uses foreign currency forward contracts, foreign currency option 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 purchases of inventory and other cross-border currency requirements not denominated in the functional currency of the business unit, are primarily denominated in United States and Hong Kong dollars as well as 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 counterparty would not have a material adverse effect on the financial condition of the Company. Hasbro does not enter into derivative financial instruments for speculative purposes. At the inception of the contracts, Hasbro designates its derivatives as either cash flow or fair value hedges. The Company formally documents all relationships between hedging instruments and hedged items as well as its risk management objectives and strategies for undertaking various hedge transactions. All hedges designated as cash flow hedges are linked to forecasted transactions and the Company assesses, both at the inception of the hedge and on an on-going basis, the effectiveness of the derivatives used in hedging transactions in offsetting changes in the cash flows of the forecasted transaction. In reporting periods prior to 2019, the ineffective portion of a hedging derivative, if any, was recognized in the consolidated statements of operations in other (income) expense. 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 in the consolidated statements of operations and requires the presentation of fair value adjustments to hedging instruments to be included in the same income statement line as the hedged item. For public companies, this standard was effective for annual reporting periods beginning after December 15, 2018. The Company adopted ASU 2017-12 in the first quarter of 2019. The adoption of this standard did not have a material impact on the Company’s results or consolidated financial statements. The Company records all derivatives, such as foreign currency exchange contracts, on the consolidated balance sheets at fair value. Changes in the derivative fair values that are designated as cash flow hedges and are effective are deferred and recorded as a component of Accumulated Other Comprehensive Loss (“AOCE”) until the hedged transactions occur and are then recognized in the consolidated statements of operations. The Company’s foreign currency contracts hedging anticipated cash flows are designated as cash flow hedges. When it is determined that a derivative is not highly effective as a hedge, the Company discontinues hedge accounting prospectively. Any gain or loss deferred through that date remains in AOCE until the forecasted transaction occurs, at which time it is reclassified to the consolidated statements of operations. To the extent the transaction is no longer deemed probable of occurring, hedge accounting treatment is discontinued and amounts deferred would be reclassified to the consolidated statements of operations. In the event hedge accounting requirements are not met, gains and losses on such instruments are included in the consolidated statements of operations. The Company uses derivatives to economically hedge intercompany loans denominated in foreign currencies. The Company does not use hedge accounting for these contracts as changes in the fair value of these contracts are substantially offset by changes in the fair value of the intercompany loans. During the third quarter of 2019 the Company hedged a portion of its exposure to fluctuations in the British pound sterling in relation to the Entertainment One Ltd. ("eOne") acquisition purchase price and other transaction related costs using a series of both foreign exchange forward and option contracts. The Company recorded realized gains of $80,000 to other (income) expense, net on the matured portion of these hedging instruments for the year ended December 29, 2019. These instruments did not qualify for hedge accounting and as such, the outstanding portion of these hedging instruments were marked to market through the Company's Consolidated Statement of Operations resulting in unrealized gains of $34,100 recorded to other (income) expense, net for the year ended December 29, 2019. Prior to the issuance of certain long-term notes due 2021 and 2044, the Company entered into a forward-starting interest rate swap contract to hedge the anticipated U.S. Treasury interest rates on the anticipated debt issuance. These instruments, which were designated and effective as hedges, were terminated on the date of the related debt issuance and the then fair value of these instruments was recorded to AOCE and amortized through the consolidated statements of operations using an effective interest rate method over the life of the related debt. Net Earnings Per Common Share Basic net earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding for the year as well as awards that have not been issued but all contingencies have been met. Diluted net earnings per share is similar except that the weighted average number of shares outstanding is increased by dilutive securities, and net earnings are adjusted, if necessary, for certain amounts related to dilutive securities. Dilutive securities include shares issuable upon exercise of stock options for which the market price exceeds the exercise price, less shares which could have been purchased by the Company with the related proceeds. Dilutive securities also include shares issuable under restricted stock unit award agreements. Options and restricted stock unit awards totaling 928, 1,077 and 499 for 2019, 2018, and 2017, respectively, were excluded from the calculation of diluted earnings per share because to include them would have been antidilutive. A reconciliation of net earnings and average number of shares for each of the three fiscal years ended December 29, 2019 is as follows:
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Capital Stock |
12 Months Ended |
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Dec. 29, 2019 | |
Equity [Abstract] | |
Capital Stock | Capital Stock In November 2019, as part of its financing for the eOne acquisition, the Company issued and sold 10,592 shares of common stock at a price of $95.00. Proceeds from the issuance, net of underwriting and other fees, was $975,185. In May 2018, the Company’s Board of Directors authorized the repurchases of up to $500,000 in common stock. Purchases of the Company’s common stock may be made from time to time, subject to market conditions, and may be made in the open market or through privately negotiated transactions. The Company has no obligation to repurchase shares under the authorization and the time, actual number, and the value of the shares which are repurchased will depend on a number of factors, including the price of the Company’s common stock. In 2019, the Company repurchased 702 shares at an average price of $87.41. The total cost of these repurchases, including transaction costs, was $61,387. At December 29, 2019, $366,593 remained under the current authorizations.
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Consolidated Statements of Operations - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 29, 2019 |
Dec. 30, 2018 |
Dec. 31, 2017 |
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Income Statement [Abstract] | |||
Net revenues | $ 4,720,227 | $ 4,579,646 | $ 5,209,782 |
Costs and expenses | |||
Cost of sales | 1,807,849 | 1,850,678 | 2,033,693 |
Royalties | 414,549 | 351,660 | 405,488 |
Product development | 262,156 | 246,165 | 269,020 |
Advertising | 413,676 | 439,922 | 501,813 |
Amortization of intangible assets | 47,259 | 28,703 | 28,818 |
Program production cost amortization | 85,585 | 43,906 | 35,798 |
Selling, distribution and administration | 1,037,103 | 1,287,560 | 1,124,793 |
Total expenses | 4,068,177 | 4,248,594 | 4,399,423 |
Operating profit | 652,050 | 331,052 | 810,359 |
Non-operating (income) expense | |||
Interest expense | 101,878 | 90,826 | 98,268 |
Interest income | (30,107) | (22,357) | (22,155) |
Other (income) expense, net | (13,931) | (7,819) | (51,904) |
Total non-operating expense, net | 57,840 | 60,650 | 24,209 |
Earnings before income taxes | 594,210 | 270,402 | 786,150 |
Income taxes | 73,756 | 49,968 | 389,543 |
Net earnings | $ 520,454 | $ 220,434 | $ 396,607 |
Net earnings attributable to Hasbro, Inc. per common share: | |||
Basic (in dollars per share) | $ 4.07 | $ 1.75 | $ 3.17 |
Diluted (in dollars per share) | 4.05 | 1.74 | 3.12 |
Cash dividends declared (in dollars per share) | $ 2.72 | $ 2.52 | $ 2.28 |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Net Earnings per Share | A reconciliation of net earnings and average number of shares for each of the three fiscal years ended December 29, 2019 is as follows:
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Program Production Costs (Tables) |
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Other Industries [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Program Production Costs | Program production costs are included in other assets and consist of the following at December 29, 2019 and December 30, 2018:
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