Segment Reporting

9 Months Ended

Sep. 29, 2019

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. 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 Wizards of the Coast digital gaming business, consumer products licensing, owned and licensed 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, U.S. and Canada and the former Entertainment and Licensing segment results for the quarter and nine months ended September 30, 2018 have been restated to reflect the change.

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

Results shown for the quarter and nine month periods ended September 29, 2019 are not necessarily representative of those which may be expected for the full year 2019, nor were those of the comparable 2018 periods representative of those actually experienced for the full year 2018. Similarly, such results are not necessarily those which would be achieved were each segment an unaffiliated business enterprise.

Information by segment and a reconciliation to reported amounts for the quarter and nine month periods ended September 29, 2019 and September 30, 2018 are as follows:



	Quarter Ended
	September 29, 2019				September 30, 2018
Net revenues	External		Affiliate		External	Affiliate
U.S. and Canada	$	898,269	2,535		912,179	2,364
International	561,137		—		560,704	2
Entertainment, Licensing and Digital	115,766		3,849		96,803	4,712
Global Operations (a)	1		538,817		—	557,049
Corporate and Eliminations (b)	—		(545,201	)	—	(564,127	)
	$	1,575,173	—		1,569,686	—



	Nine Months Ended
	September 29, 2019				September 30, 2018
Net revenues	External		Affiliate		External	Affiliate
U.S. and Canada	$	1,766,649	7,379		1,714,536	7,093
International	1,221,224		186		1,229,093	290
Entertainment, Licensing and Digital	304,266		7,989		246,747	11,378
Global Operations (a)	81		1,088,860		109	1,152,851
Corporate and Eliminations (b)	—		(1,104,414	)	—	(1,171,612	)
	$	3,292,220	—		3,190,485	—

As a result of the realignment of the Company's financial reporting segments, revenues of $11,999 and $33,271 for the quarter and nine months ended September 30, 2018, respectively, were reclassified from the U.S. and Canada segment to the Entertainment, Licensing and Digital segment to conform to current year presentation.



	Quarter Ended					Nine Months Ended
Operating profit (loss)	September 29, 2019		September 30, 2018			September 29, 2019		September 30, 2018
U.S. and Canada	$	193,686	$	223,061		$	313,795	$	269,539
International	67,238		66,274			51,410		10,359
Entertainment, Licensing and Digital	24,594		37,113			62,550		76,016
Global Operations (a)	11,074		3,179			6,342		(4,623		)
Corporate and Eliminations (b)	618		(16,291		)	27,573		(30,786		)
	$	297,210	$	313,336		$	461,670	$	320,505

As a result of the realignment of the Company's financial reporting segments, operating profit of $3,455 and $9,825 for the quarter and nine months ended September 30, 2018, respectively, were reclassified from the U.S. and Canada segment to the Entertainment, Licensing and Digital segment to conform to current year presentation.



Total assets	September 29, 2019			September 30, 2018		December 30, 2018
U.S. and Canada	$	3,331,125		3,028,291		2,898,816
International	2,394,488			2,323,866		2,229,053
Entertainment, Licensing and Digital	1,031,906			890,526		621,595
Global Operations (a)	3,255,286			4,306,291		3,197,847
Corporate and Eliminations (b)	(4,458,181		)	(5,053,645	)	(3,684,323	)
	$	5,554,624		5,495,329		5,262,988

(a) The Global Operations segment derives substantially all of its revenues, and thus its operating results, from intersegment activities.

(b) Certain long-term assets, including property, plant and equipment, goodwill and other intangibles, which benefit multiple operating segments, are included in Corporate and Eliminations. Allocations of certain expenses related to these assets to the individual operating segments are done at the beginning of the year based on budgeted amounts. Any differences between actual and budgeted amounts are reflected in Corporate and Eliminations because allocations are translated from the U.S. Dollar to local currency at budgeted rates when recorded. Corporate and Eliminations also includes the elimination of inter-company balance sheet amounts.

The following table represents consolidated International segment net revenues by major geographic region for the quarters and nine month periods ended September 29, 2019 and September 30, 2018:



	Quarter Ended			Nine Months Ended
	September 29, 2019		September 30, 2018	September 29, 2019		September 30, 2018
Europe	$	319,277	331,353	$	673,728	686,490
Latin America	151,987		145,703	305,106		308,065
Asia Pacific	89,873		83,648	242,390		234,538
Net revenues	$	561,137	560,704	$	1,221,224	1,229,093

The following table presents consolidated net revenues by brand portfolio for the quarters and nine month periods ended September 29, 2019 and September 30, 2018:



	Quarter Ended				Nine Months Ended
	September 29, 2019		September 30, 2018		September 29, 2019		September 30, 2018
Franchise Brands	$	779,659	$	847,745	$	1,749,948	$	1,715,986
Partner Brands	427,029		305,827		812,466		714,424
Hasbro Gaming	232,287		280,832		463,272		520,334
Emerging Brands	136,198		135,282		266,534		239,741
Total	$	1,575,173	$	1,569,686	$	3,292,220	$	3,190,485

Hasbro's total gaming category, which includes all gaming net revenues, both those reported in Hasbro Gaming and those reported elsewhere, most notably MAGIC: THE GATHERING and MONOPOLY, totaled $449,393 and $1,086,151 for the quarter and nine months ended September 29, 2019, respectively. For the quarter and nine months ended September 30, 2018, total gaming revenues were $447,844 and $964,159, respectively.