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Goodwill and Intangible Assets
 12 Months Ended
Dec. 25, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Goodwill and Intangible Assets
Goodwill
During the first quarter of 2021, the Company realigned its financial reporting structure creating the following three principal reporting segments: Consumer Products, Wizards of the Coast and Digital Gaming and Entertainment. In our realignment, some, but not all, of our reporting units were changed. As a result of these changes, the Company reallocated its goodwill among the revised reporting units based on the changes in relative fair values of the respective reporting units.
Changes in the carrying amount of goodwill, by operating segment, for the years ended December 25, 2022 and December 26, 2021 are as follows:
(In millions)Consumer ProductsWizards of the Coast and Digital GamingEntertainmentTotal
2022
Balance at December 26, 2021$1,584.9 307.3 1,527.4 3,419.6 
Acquired during the period— 64.7 — 64.7 
Impairment during the period— — (11.8)(11.8)
Foreign exchange translation(0.2)(0.5)(1.7)(2.4)
Balance at December 25, 2022$1,584.7 371.5 1,513.9 3,470.1 
2021
Balance at December 27, 2020$1,385.7 53.1 2,252.9 3,691.7 
Goodwill allocation199.4 254.2 (453.6)— 
Goodwill associated with disposal of business — — (162.2)(162.2)
Impairment during the period— — (108.8)(108.8)
Foreign exchange translation(0.2)— (0.9)(1.1)
Balance at December 26, 2021$1,584.9 307.3 1,527.4 3,419.6 
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.
On May 19, 2022, the Company completed its acquisition of D&D Beyond for $146.3 million, which was funded with cash on hand. Based on the valuation of these assets, $64.7 million was allocated to goodwill within the Wizards of the Coast and Digital Gaming segment during the second quarter of 2022.
During the third quarter of 2022, the Company determined to exit certain non-core businesses within the Entertainment segment. A revaluation of the effected businesses resulted in a pre-tax non-cash goodwill impairment charge of $11.8 million, recorded within Loss on Disposal of Business in the Consolidated Statement of Operations, and within the Entertainment segment for the year ended December 25, 2022.
During the fourth quarter of 2022, the Company performed a qualitative goodwill assessment with respect to each of its reporting units and determined that the fair values of the Company’s reporting units exceeded their carrying values. As a result of this assessment, the Company concluded that, other than the Loss on Disposal goodwill impairment noted above, there was no other impairment to any of its reporting units. Accordingly, no goodwill impairment was recorded as a result of the qualitative test for the year ended December 25, 2022.
During the second quarter of 2021, the Company entered into a definitive agreement to sell the Entertainment One Music business ("eOne Music") for an aggregate sales price of $385.0 million, subject to certain closing adjustments related to working capital and net debt. Based on the value of the net assets held by eOne Music, which included goodwill and intangible assets allocated to eOne Music as part of the eOne acquisition, the Company recorded a pre-tax non-cash goodwill impairment charge of $108.8 million, during 2021, within Loss on Disposal of Business in the Consolidated Statements of Operations, and within the Entertainment segment. On June 29, 2021, during the Company's fiscal third quarter, the eOne Music sale was completed and associated goodwill and intangible assets were removed from the consolidated financial statements. There were no underlying business conditions that provided an indication of the existence of impairment.
During the fourth quarter of 2021 the Company performed a quantitative goodwill assessment with respect to each of its reporting units and determined that the fair values of the Company’s reporting units exceeded their carrying values. As a result of this assessment, the Company concluded that, other than the Music goodwill impairment loss noted above, there was no other impairment to any of its reporting units. Accordingly, no goodwill impairment was recorded as a result of the quantitative test for the year ended December 26, 2021.
Other Intangible Assets, Net
The following table represents a summary of the Company’s other intangible assets, net at December 25, 2022 and December 26, 2021:
(In millions)20222021
Acquired product rights$2,112.1 2,101.7 
Licensed rights of entertainment properties45.0 45.0 
Impairment(281.0)— 
Accumulated amortization(1,137.2)(1,050.4)
Amortizable intangible assets738.9 1,096.3 
Product rights with indefinite lives75.7 75.7 
Total other intangibles assets, net$814.6 1,172.0 
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 definite-lived
intangible assets in the fourth quarter of 2022 and 2021, 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.
During the fourth quarter of 2022, following the Company's Blueprint 2.0 strategy shift with a focus on fewer, bigger, better brands, it was determined that there was a partial impairment of the Company's definite-lived Power Rangers intangible asset as the approach to prioritize other brands in film development resulted in lower than expected cash flow related to the brand. Using the discounted cash flow method under the income approach to determine fair value, changes to anticipated revenues and related cash flows led to the determination that the carrying value of this intangible asset exceeded its fair value, thus resulting in an impairment. Charges of $281.0 million were recorded in the fourth quarter of 2022 within Selling, Distribution and Administration within the Corporate and Other segment.
There were no other triggering events in 2022 or 2021 that would indicate the Company's intangible assets were impaired.
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:
(In millions)
2023$89.6 
202487.9 
202587.9 
202687.9 
202774.9