Derivative Financial Instruments

3 Months Ended

Mar. 31, 2024

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 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

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, primarily for the remainder of 2024, and into 2025.

At March 31, 2024, April 2, 2023 and December 31, 2023, the notional amounts and fair values of the Company's foreign currency forward contracts designated as cash flow hedging instruments were as follows:


	March 31, 2024				April 2, 2023				December 31, 2023
Hedged transaction	Notional Amount		Fair Value		Notional Amount		Fair Value		Notional Amount		Fair Value
Inventory purchases	$	151.2	$	0.3	$	141.5	$	(5.1)	$	129.9	$	(1.7)
Sales	75.3		(0.2)		74.5		0.4		89.7		(0.2)
Production financing and other	30.7		(1.1)		123.7		0.8		31.7		(0.5)
Total	$	257.2	$	(1.0)	$	339.7	$	(3.9)	$	251.3	$	(2.4)

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 March 31, 2024, April 2, 2023 and December 31, 2023 as follows:


	March 31, 2024		April 2, 2023		December 31, 2023
Prepaid expenses and other current assets
Unrealized gains	$	2.4	$	2.7	$	0.5
Unrealized losses	(0.8)		(1.8)		(0.1)
Net unrealized gains	$	1.6	$	0.9	$	0.4

Other Assets
Unrealized gains	$	0.1	$	—	$	—

Net unrealized gains	$	0.1	$	—	$	—

Accrued liabilities
Unrealized gains	$	1.4	$	2.5	$	0.7
Unrealized losses	(4.1)		(7.3)		(3.5)
Net unrealized losses	$	(2.7)	$	(4.8)	$	(2.8)

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the quarters ended March 31, 2024 and April 2, 2023 as follows:


	Quarter Ended
	March 31, 2024		April 2, 2023
Statements of Operations Classification
Cost of sales	$	0.1	$	2.5
Net revenues	(0.1)		0.1
Other	(0.1)		(0.2)
Net realized (losses) gains	$	(0.1)	$	2.4

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 March 31, 2024, April 2, 2023 and December 31, 2023, the total notional amounts of the Company's undesignated derivative instruments were $328.6 million, $723.3 million and $340.5 million, respectively.

At March 31, 2024, April 2, 2023 and December 31, 2023, the fair values of the Company's undesignated derivative financial instruments were recorded in the Consolidated Balance Sheets as follows:


	March 31, 2024		April 2, 2023		December 31, 2023
Prepaid expenses and other current assets
Unrealized gains	$	7.0	$	6.5	$	0.3
Unrealized losses	(0.2)		(4.3)		—
Net unrealized gains	$	6.8	$	2.2	$	0.3

Accrued liabilities
Unrealized gains	$	—	$	—	$	1.4
Unrealized losses	(0.2)		(0.3)		(2.5)
Net unrealized losses	$	(0.2)	$	(0.3)	$	(1.1)

The Company recorded net gains of $9.1 million and $4.4 million on these instruments to Other (income) expense, net for the quarters ended March 31, 2024 and April 2, 2023, 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 contracts relate.

For additional information related to the Company's derivative financial instruments (see notes 6 and 11).