UNITED STATES SECURITIES and EXCHANGE COMMISSION Washington, D
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 __________________ FORM 10-Q __________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 27, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-6682 __________________ HASBRO, INC. (Exact name of registrant as specified in its charter) Rhode Island 05-0155090 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 1027 Newport Avenue Pawtucket, Rhode Island 02861 (Address of Principal Executive Offices) (Zip Code) (401) 431-8697 Registrant's telephone number, including area code Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.50 par value per share HAS The NASDAQ Global Select Market Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ] Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [x] No [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer x Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No [x] The number of shares of Common Stock, par value $.50 per share, outstanding as of July 26, 2021 was 137,683,075. PART I. FINANCIAL INFORMATION Item 1. Financial Statements. HASBRO, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Millions of Dollars Except Share Data) (Unaudited) June 27, June 28, December 27, 2021 2020 2020 ASSETS Current assets Cash and cash equivalents including restricted cash of $83.1 million, $71.9 million and $73.2 million $ 1,228.2 $ 1,038.0 $ 1,449.7 Accounts receivable, less allowance for doubtful accounts of $30.5 million, $28.0 million and $28.1 million 865.9 911.3 1,391.7 Inventories 499.6 564.2 395.6 Prepaid expenses and other current assets 543.2 672.2 609.6 Assets held for sale 479.5 — — Total current assets 3,616.4 3,185.7 3,846.6 Property, plant and equipment, less accumulated depreciation of $589.1 million, $528.2 million and $553.0 million 466.2 482.2 489.0 Other assets Goodwill 3,420.8 3,666.0 3,691.7 Other intangible assets, net of accumulated amortization of $1,002.5 million, $855.0 million and $964.6 million 1,248.3 1,559.1 1,530.8 Other 1,350.5 1,329.1 1,260.2 Total other assets 6,019.6 6,554.2 6,482.7 Total assets $ 10,102.2 $ 10,222.1 $ 10,818.3 LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS' EQUITY Current liabilities Short-term borrowings $ 0.8 $ 6.4 $ 6.6 Current portion of long-term debt 189.6 378.6 432.6 Accounts payable 382.4 335.2 425.5 Accrued liabilities 1,396.5 1,261.4 1,538.6 Liabilities held for sale 76.3 — — Total current liabilities 2,045.6 1,981.6 2,403.3 Long-term debt 4,388.7 4,802.5 4,660.0 Other liabilities 753.0 771.7 793.9 Total liabilities $ 7,187.3 $ 7,555.8 $ 7,857.2 Redeemable noncontrolling interests 24.5 24.1 24.4 Shareholders' equity Preference stock of $2.50 par value. Authorized 5,000,000 shares; none issued — — — Common stock of $0.50 par value. Authorized 600,000,000 shares; issued 220,286,736 shares at June 27, 2021, June 28, 2020, and December 27, 2020 110.1 110.1 110.1 Additional paid-in capital 2,361.2 2,297.3 2,329.1 Retained earnings 4,110.3 4,064.8 4,204.2 Accumulated other comprehensive loss (183.5) (308.1) (195.0) Treasury stock, at cost; 82,617,426 shares at June 27, 2021; 83,264,365 shares at June 28, 2020; and 82,979,403 shares at December 27, 2020 (3,547.6) (3,560.0) (3,551.7) Noncontrolling interests 39.9 38.1 40.0 Total shareholders' equity 2,890.4 2,642.2 2,936.7 Total liabilities, noncontrolling interests and shareholders' equity $ 10,102.2 $ 10,222.1 $ 10,818.3 See accompanying condensed notes to consolidated financial statements. HASBRO, INC. AND SUBSIDIARIES Consolidated Statements of Operations (Millions of Dollars Except Per Share Data) (Unaudited) Quarter Ended Six Months Ended June 27, June 28, June 27, June 28, 2021 2020 2021 2020 Net revenues $ 1,322.2 $ 860.3 $ 2,437.0 $ 1,965.9 Costs and expenses: Cost of sales 345.0 253.2 634.9 515.9 Program cost amortization 110.7 50.6 208.2 182.8 Royalties 111.5 97.4 220.4 210.2 Product development 87.2 58.4 149.0 112.2 Advertising 105.4 72.3 193.3 174.0 Amortization of intangibles 29.7 34.7 62.6 71.5 Loss on assets held for sale 101.8 — 101.8 — Selling, distribution and administration 354.3 281.2 642.9 560.3 Acquisition and related costs — 10.3 — 160.1 Total costs and expenses 1,245.6 858.1 2,213.1 1,987.0 Operating profit (loss) 76.6 2.2 223.9 (21.1) Non-operating expense (income): Interest expense 46.1 49.6 94.0 104.3 Interest income (1.2) (0.9) (2.4) (5.6) Other income, net (9.4) (2.8) (38.3) (4.1) Total non-operating expense, net 35.5 45.9 53.3 94.6 Earnings (loss) before income taxes 41.1 (43.7) 170.6 (115.7) Income tax expense (benefit) 63.0 (10.8) 75.0 (14.9) Net earnings (loss) (21.9) (32.9) 95.6 (100.8) Net earnings attributable to noncontrolling interests 1.0 1.0 2.3 2.8 Net earnings (loss) attributable to Hasbro, Inc. $ (22.9) $ (33.9) $ 93.3 $ (103.6) Net earnings (loss) per common share: Basic $ (0.17) $ (0.25) $ 0.68 $ (0.75) Diluted $ (0.17) $ (0.25) $ 0.68 $ (0.75) Cash dividends declared per common share $ 0.68 $ 0.68 $ 1.36 $ 1.36 See accompanying condensed notes to consolidated financial statements. HASBRO, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Earnings (Loss) (Millions of Dollars) (Unaudited) Quarter Ended Six Months Ended June 27, June 28, June 27, June 28, 2021 2020 2021 2020 Net earnings (loss) $ (21.9) $ (32.9) $ 95.6 $ (100.8) Other comprehensive earnings (losses): Foreign currency translation adjustments, net of tax 24.0 (7.1) 7.9 (139.0) Unrealized holding gains on available-for-sale securities, net of tax 0.1 2.5 0.2 2.1 Net (losses) gains on cash flow hedging activities, net of tax (3.2) (3.7) 2.4 21.3 Reclassifications to earnings, net of tax: Net gains (losses) on cash flow hedging activities 1.8 (5.3) 0.6 (8.9) Amortization of unrecognized pension and postretirement amounts 0.2 0.3 0.4 0.6 Total other comprehensive earnings (loss), net of tax $ 22.9 $ (13.3) $ 11.5 $ (123.9) Total comprehensive earnings attributable to noncontrolling interests 1.0 1.0 2.3 2.8 Total comprehensive earnings (loss) attributable to Hasbro, Inc. $ — $ (47.2) $ 104.8 $ (227.5) See accompanying condensed notes to consolidated financial statements. HASBRO, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Millions of Dollars) (Unaudited) Six Months Ended June 27, June 28, 2021 2020 Cash flows from operating activities: Net earnings (loss) $ 95.6 $ (100.8) Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation of plant and equipment 67.6 56.6 Amortization of intangibles 62.6 71.5 Asset impairments — 40.9 Loss on assets held for sale 101.8 — Program cost amortization 208.2 182.8 Deferred income taxes 43.6 (11.1) Stock-based compensation 37.1 26.1 Other non-cash items 0.2 — Change in operating assets and liabilities net of acquired balances: Decrease in accounts receivable 533.9 722.0 Increase in inventories (109.5) (125.4) Decrease (increase) in prepaid expenses and other current assets 38.8 (40.2) Program spend, net (308.3) (220.4) Decrease in accounts payable and accrued liabilities (169.3) (344.4) Change in net deemed repatriation tax (18.4) — Other (6.8) 0.6 Net cash provided by operating activities 577.1 258.2 Cash flows from investing activities: Additions to property, plant and equipment (63.1) (64.0) Acquisitions, net of cash acquired — (4,403.9) Other (3.2) 13.1 Net cash utilized by investing activities (66.3) (4,454.8) Cash flows from financing activities: Proceeds from borrowings with maturity greater than three months 114.7 1,023.5 Repayments of borrowings with maturity greater than three months (635.0) (98.2) Net repayments of other short-term borrowings (6.3) (4.5) Stock-based compensation transactions 9.4 1.8 Dividends paid (187.5) (186.2) Payments related to tax withholding for share-based compensation (9.5) (5.7) Redemption of equity instruments — (47.4) Other (4.2) (4.8) Net cash (utilized) provided by financing activities (718.4) 678.5 Effect of exchange rate changes on cash 4.3 (24.4) Net decrease in cash, cash equivalents and restricted cash (203.3) (3,542.5) Net change due to cash classified as held for sale (18.2) — Net decrease in cash, cash equivalents and restricted cash (221.5) (3,542.5) Cash, cash equivalents and restricted cash at beginning of year 1,449.7 4,580.4 Cash, cash equivalents and restricted cash at end of period $ 1,228.2 $ 1,037.9 Supplemental information Cash paid during the period for: Interest $ 90.2 $ 81.5 Income taxes $ 70.8 $ 30.4 See accompanying condensed notes to consolidated financial statements.