Derivative Financial Instruments

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Hasbro uses foreign currency forward and option contracts to mitigate the impact of currency rate fluctuations on firmly committed and projected future foreign currency transactions. These over-the-counter contracts, which hedge future currency requirements related to purchases of inventory, product sales, television and film production cost and production financing facilities (see note 11) as well as other cross-border transactions not denominated in the functional currency of the business unit, are primarily denominated in United States and Hong Kong dollars, and Euros. All contracts are entered into with a number of counterparties, all of which are major financial institutions. The Company believes that a default by a single counterparty would not have a material adverse effect on the financial condition of the Company. Hasbro does not enter into derivative financial instruments for speculative purposes.

Cash Flow Hedges

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, product sales and other cross-border transactions in 2024.

As of December 31, 2023 and December 25, 2022, the notional amounts and fair values of the Company’s foreign currency forward and option contracts designated as cash flow hedging instruments were as follows:


	2023			2022
(In millions)	Notional Amount		Fair Value	Notional Amount	Fair Value
Hedged transaction
Inventory purchases	$	129.9	(1.7)	166.3	(2.7)
Sales	89.7		(0.2)	99.2	1.2
Production financing and other	31.7		(0.5)	116.8	1.5
Total	$	251.3	(2.4)	382.3	—

The Company has a master agreement with each of its counterparties that allows for the netting of outstanding forward contracts. The fair values of the Company’s foreign currency forward contracts designated as cash flow hedges are recorded in the Consolidated Balance Sheets at December 31, 2023 and December 25, 2022 as follows:


(In millions)	2023		2022
Prepaid expenses and other current assets
Unrealized gains	$	0.5	4.3
Unrealized losses	(0.1)		(1.8)
Net unrealized gains	$	0.4	2.5
Other assets
Unrealized gains	$	—	0.3
Unrealized losses	—		—
Net unrealized gains	$	—	0.3
Accrued liabilities
Unrealized gains	$	0.7	1.6
Unrealized losses	(3.5)		(4.4)
Net unrealized losses	$	(2.8)	(2.8)

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the years ended December 31, 2023, December 25, 2022 and December 26, 2021 as follows:


(In millions)	2023		2022	2021
Consolidated Statements of Operations Classification
Cost of sales	$	(1.1)	17.3	(4.7)
Net revenues	0.2		2.3	1.0
Other	(2.2)		(0.9)	2.0
Net realized (losses) gains	$	(3.1)	18.7	(1.7)

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. The Company does not use hedge accounting for these contracts as changes in the fair values of these contracts are offset by changes in the fair value of the balance sheet items. As of December 31, 2023 and December 25, 2022, the total notional amounts of the Company’s undesignated derivative instruments were $340.5 million and $765.6 million, respectively.

As of December 31, 2023 and December 25, 2022, the fair value of the Company’s undesignated derivative financial instruments are recorded in the Consolidated Balance Sheets as follows:


(In millions)	2023		2022
Prepaid expenses and other current assets
Unrealized gains	$	0.3	10.9
Unrealized losses	—		(5.9)
Net unrealized gains	$	0.3	5.0

Accrued liabilities
Unrealized gains	$	1.4	—
Unrealized losses	(2.5)		—
Net unrealized losses	$	(1.1)	—
Total unrealized (losses) gains, net	$	(0.8)	5.0

The Company recorded net gains of $23.4 million, $42.1 million and $4.6 million on these instruments to Other expense (income), net for 2023, 2022 and 2021, 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.

For additional information related to the Company’s derivative financial instruments see notes 4 and 14.