HASBRO, INC. (HAS) FY 2024 MD&A

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

OBJECTIVE

Our objective within the following discussion is to provide an analysis of the Company’s Financial Condition, Cash Flows and Results of Operations from management's perspective, which should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto, included in Part II, Item 8. Financial Statements, of this Annual Report on Form 10-K.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements concerning the Company’s expectations and beliefs. See “Statement Regarding Forward-Looking Statements” and Part I, Item 1A. Risk Factors, of this Form 10-K for a discussion of other uncertainties, risks and assumptions associated with these statements.

The following includes a comparison of our consolidated results of operations for fiscal years 2024 and 2023. For a comparison of our consolidated results of operations for fiscal years 2023 and 2022, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024. Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in millions of dollars or shares, except for per share amounts.

The fiscal year ended December 29, 2024 was a fifty-two week period and fiscal year December 31, 2023 was a fifty-three week period.

EXECUTIVE SUMMARY

Hasbro is a leading game, IP, and toy company whose mission is to create joy and community through the magic of play. With over 100 years of expertise, we deliver play experiences for fans of all ages around the world, through physical and digital games, video games, toys, licensed consumer products, location-based entertainment, film, TV and more.

We generate revenue and earn cash by developing, marketing, licensing and selling products, play and entertainment experiences, based on our global brands as well as other IP in a broad variety of categories. This includes: innovative toy and gaming brands and role-playing and fantasy card collecting games; the marketing and sale of toys and games, including our owned and partner brands, through retail stores, ecommerce platforms and Hasbro Direct, our direct-to-consumer platform; the distribution, license and sale of digital games developed both internally and through licensing out our IP to third parties, such as Baldur's Gate 3, Monopoly Go! and Magic: The Gathering Arena and other digital games; and entertainment content. Additionally, the Company generates revenue through licensing our brands to third parties for toys and games, consumer products, such as apparel and

32

Table of Contents

publishing, as well as for use in theme park attractions and other forms of location-based entertainment and within formats such as film and TV programming.

Summary of Financial Performance

Results of Operations — Consolidated

The following table presents the consolidated results of operations for 2024 and 2023:

Net Revenues

Consolidated net revenues for the year ended December 29, 2024 decreased 17.3% to $4,135.5 million from $5,003.3 million for the year ended December 31, 2023, primarily driven by a $579.0 million, or 88%, decline in the Entertainment segment as a result of the sale of the eOne Film and TV business during the fourth quarter of 2023 and a $342.5 million, or 12%, decline in the Consumer Products segment, partially offset by a $53.7 million, or 4%, increase in the Wizards of the Coast and Digital Gaming segment. See the Segment Results discussion below for further details.

33

Table of Contents

The following table presents net revenues expressed in millions of dollars, by brand portfolio for 2024 and 2023:

(1) Net revenues from the Company's Non-Hasbro-branded Film and TV portfolio were associated with the Company's non-core eOne Film and TV business sold to Lionsgate during the fourth quarter of 2023.

Franchise Brands: Our Franchise Brands include our flagship owned or controlled brands, which we believe can deliver significant revenues, profits and growth over the long term, such as MAGIC: THE GATHERING, Hasbro Gaming, PLAY-DOH, TRANSFORMERS, DUNGEONS & DRAGONS, PEPPA PIG and NERF. The Franchise Brands portfolio net revenues decreased 4% in 2024 as compared to 2023. The net revenue decrease primarily reflects lower net revenues from NERF, DUNGEONS & DRAGONS, and TRANSFORMERS products. Net revenues in 2023 were supported by DUNGEONS & DRAGONS digital game and products, most notably Baldur's Gate 3, the DUNGEONS & DRAGONS-based role-playing video game released during the third quarter 2023, as well as theatrical release of Dungeon & Dragons: Honor Among Thieves released in March 2023. Additionally, net revenues in 2023 were supported by TRANSFORMERS products from the June 2023 theatrical release of TRANSFORMERS: Rise of the Beasts as compared to the late September 2024 theatrical release of Transformers One. The lower net revenues in 2024 from NERF and TRANSFORMERS products were partially offset by higher net revenues from MONOPOLY GO!.

Partner Brands: Partner Brands include those brands we license from other parties for which we develop toy and game products. Partner brand revenues fluctuate based primarily on the entertainment releases around these brands in any given year, such as MARVEL, including SPIDER-MAN and THE AVENGERS, LUCASFILMS' STAR WARS, BEYBLADE, GHOSTBUSTERS, and INDIANA JONES. The Partner Brands portfolio net revenues decreased 15% in 2024 as compared to 2023. During 2024, Partner Brands net revenue decreases were driven by lower net revenues from the Company's products for STAR WARS and MARVEL which benefited from a broader slate of entertainment releases in prior years without a more recent release entertainment release to support revenue in 2024. Additionally, revenue in 2023 was higher due to the Company's products for INDIANA JONES supported by the June 2023 theatrical release of Indiana Jones and the Dial of Destiny.

Portfolio Brands: Portfolio Brands include those brands we own or control which we feel have upside in revenue and profitability that have not yet grown to the significance of a franchise brand. The Portfolio Brands net revenues decreased 17% in 2024 as compared to 2023 primarily driven by lower net revenues from POWER RANGERS, PJ MASKS and BABY ALIVE products which were partially offset by revenue contributions from FURBY products following the Company's reintroduction of the brand and refreshed product line during the second quarter of 2023, the release of the next generation of BEYBLADE in 2024, and licensing revenue for MY LITTLE PONY trading cards.

Non-Hasbro Branded Film & TV: Net revenues from the Company's Non-Hasbro-branded Film and TV portfolio were associated with the eOne Film and TV business sold during the fourth quarter of 2023. Effective in the first quarter of 2024, the Company moved the remaining Non-Hasbro Branded Film & TV brands into Portfolio Brands to align with the Company's Brand Strategy. For comparability, net revenues for 2023 have been reclassified to reflect the movement, resulting in a change of $0.5 million.

During the first quarter of 2025, in light of the Company's renewed strategy and differing level of investment depending on the growth and margin potential for the brand and business line, the Company will no longer report its brand portfolio based upon the categories described above.

OPERATING COSTS AND EXPENSES

Cost of Sales: Cost of sales primarily consists of purchased materials, labor, manufacturing overhead and other inventory-related costs such as obsolescence. Cost of sales decreased 30.9% to $1,179.5 million, or 28.5% of net revenues, for 2024 compared to $1,706.0 million, or 34.1% of net revenues, for 2023. The Cost of sales decrease in dollars and as a percent of net revenues was driven primarily by lower sales volumes, lower inventory obsolescence charges, supply chain productivity, and cost savings initiatives, and a $26.7 million benefit related to a historical

34

Table of Contents

over-accrual of vendor commitment liabilities as discussed in Note 1, Summary of Significant Accounting Policies, in our consolidated financial statements.

Program Cost Amortization: Program cost amortization totaled $49.3 million, or 1.2% of net revenues in 2024, compared to $448.9 million, or 9.0% of net revenues in 2023. The majority of the Company's program costs are capitalized as incurred and amortized using the individual-film-forecast method. The Company also utilizes the percentage of completion methodology, primarily related to unscripted content. Program cost amortization reflects both the phasing of revenues associated with films and television programming, as well as the type of content being produced and distributed. The decrease in dollars and as a percent of net revenues during 2024 was driven by the impact of the sale of the eOne Film and TV business during the fourth quarter of 2023 as prior year Program costs were primarily associated with the eOne Film and TV business.

Royalties: Royalty expense totaled $284.2 million, or 6.9% of net revenues, in 2024 compared to $428.3 million, or 8.6% of net revenues, in 2023. Fluctuations in royalty expense generally relate to the volume of entertainment-driven products sold in a given period, especially if the Company is selling product tied to one or more major motion picture releases in the period. The decrease in Royalty expense in dollars and as a percent of net revenues during 2024 directly reflects the impact of the sale of the eOne Film and TV business.

Product Development: Product development expense in 2024 totaled $294.1 million, or 7.1% of net revenues, compared to $306.9 million, or 6.1% of net revenues, in 2023. Product development expenditures reflect the Company’s investment in innovation and anticipated growth across our brand portfolio. The decrease in Product development expense during 2024 was driven by cost savings initiatives, along with phasing of product releases.

Advertising: Advertising expense in 2024 totaled $319.5 million, or 7.7% of net revenues, compared to $358.4 million or 7.2% of net revenues in 2023. The level of the Company’s advertising expense is generally impacted by revenue mix, the amount and type of theatrical releases and television programming delivered. The Advertising expense decrease during 2024 was primarily driven by the sale of the eOne Film and TV business, along with declines in the advertising expense in the Consumer Products segment due to lower net revenues.

Amortization of Intangible Assets: Amortization of intangible assets decreased to $68.3 million, or 1.7% of net revenues, in 2024 compared to $83.0 million, or 1.7% of net revenues, in 2023. The decrease in 2024 reflects lower definite lived intangible assets due to the sale of the eOne Film and TV business and impairments taken in 2023. See further detail of impairments taken in 2023 in Note 7, Goodwill and Intangible Assets, in our consolidated financial statements for additional information on impairment of intangible assets.

Impairment of Goodwill: There were no goodwill impairment charges during 2024. During 2023, the Company recorded $1,191.2 million of non-cash goodwill impairment charges associated with goodwill assigned to the Company's Film and TV reporting unit. See further detail in Note 7, Goodwill and Intangible Assets, in our consolidated financial statements related to the goodwill impairment charges.

Loss on Disposal of Business: Loss on disposal of business decreased to $37.4 million, or 0.9% of net revenues, in 2024 compared to $539.0 million, or 10.8% of net revenues, in 2023. The Loss on disposal of business for both periods represents the loss recognized associated with the sale of the Company's eOne Film and TV business within the Entertainment segment during 2023. See Note 3, Sale of Entertainment One Film and TV Business, in our consolidated financial statements for additional information on the sale of the eOne Film and TV business.

Selling, Distribution and Administration Expenses: Selling, distribution and administration expenses decreased to $1,213.2 million, or 29.3% of net revenues in 2024, from $1,480.4 million, or 29.6% of net revenues, in 2023. The decrease in Selling, distribution and administration expenses in dollars and as a percent of net revenues during the 2024 primarily reflects lower administrative expenses due to cost savings initiatives, a prior year intangible asset impairment charges of $65.0 million related to the Company's eOne trademark intangible asset and $51.0 million related to the Company's PJ MASKS intangible asset, along with a non-recurring stock-compensation favorable adjustment of $18.1 million recorded during the first quarter of 2024, partially offset by a non-recurring $31.1 million expense related to historical environmental exposures as discussed in Note 1, Summary of Significant Accounting Policies, in our consolidated financial statements.

NON-OPERATING EXPENSE (INCOME)

Interest Expense: Interest expense totaled $171.2 million in 2024 compared to $186.3 million in 2023. The decrease in Interest expense during 2024 primarily reflects lower average outstanding borrowings in 2024 as compared to 2023 due to the assumption of the production financing borrowings by Lionsgate as part of the eOne Film and TV business and due to the retirement of the Company's variable-rate Five-Year term loan using proceeds from the sale of the eOne Film and TV business, both occurring during the fourth quarter of 2023, the full payment

35

Table of Contents

of the 2024 Notes and repurchases of the 2026 Notes during the fourth quarter of 2024. These decreases were partially offset by the issuance of the 2034 Notes (see Liquidity and Capital Resources discussion below for further information including description of the partial payments of the 2026 Notes and the issuance of the 2034 Notes).

Interest Income: Interest income was $47.3 million in 2024 compared to $23.0 million in 2023. Higher Interest income in 2024 primarily reflects higher average interest rates in 2024 compared to 2023, along with the Company's investment in short-term treasury bills in connection with the issuance of the 2034 Notes that fully matured in the fourth quarter of 2024 (see Liquidity and Capital Resources discussion below for further information including description of the 2034 Notes).

Other Expense, Net: Other expense, net was $69.1 million in 2024 compared to Other expense, net of $7.0 million in 2023. The change in Other expense, net during 2024 was driven primarily by an impairment loss of $78.2 million related to our joint venture investment in the Discovery Family Channel as discussed in Note 8, Equity Method Investment, in our consolidated financial statements.

INCOME TAXES

Income tax expense totaled $102.6 million on pre-tax income of $497.0 million during 2024 compared to an income tax benefit of $221.3 million on pre-tax loss of $1,709.1 million during 2023. During 2024, the Company incurred a $37.4 million unfavorable adjustment to the 2023 Loss on sale of the Film & TV reporting unit with no corresponding tax benefit. Absent the unfavorable adjustment to the loss on sale with no corresponding tax benefit, the Company recorded a net discrete tax benefit of $13.1 million, primarily associated with a benefit from the release of uncertain tax positions for certain statute of limitation expirations, and favorable return to provision adjustments. Fiscal year 2023 includes discrete items related to an impairment of goodwill in our Family Brands reporting unit of $960.0 million with no tax benefit and an impairment of goodwill in the Film and TV reporting unit of $231.2 million with no tax benefit. Exclusive of the goodwill impairments, the Company recorded a net discrete tax benefit of $278.7 million. This benefit is primarily related to two items: (i) the Company recognized tax benefits of $124.0 million associated with the impairment of trade names in our Film and TV reporting unit, as well as loss on assets held for sale, and (ii) during 2023, the Company concluded its discussions with the tax authorities in Switzerland as to the application of the grandfathering rules related to 2020 Swiss Tax Reform. This resulted in the recording of a deferred tax asset of $135.6 million related to tax intangibles that will be amortized over time and result in a future cash tax benefit. This treatment applies starting in 2021.

Subsequent to the United States passing the Tax Cuts and Jobs Act (the "Tax Act"), the Company has greater flexibility to manage cash globally. The Company intends to repatriate the accumulated foreign earnings as needed from time to time. The Company still has significant cash needs outside the United States and continues to consistently monitor and analyze its global working capital and cash requirements. As of 2024, we have recorded $4.6 million of foreign withholding and U.S. state income tax liability. The Company will continue to record additional tax effects, if any, in the period that the on-going distribution analysis is completed and is able to make reasonable estimates.

Tax laws are regularly being re-examined and evaluated globally. The Organization for Economic Co-operation and Development ("OECD") has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as "Pillar 2"). Certain aspects of Pillar 2 were effective in 2024, which were not material to the Company’s financial statements, and other aspects are effective January 1, 2025. Many non-US tax jurisdictions have either (i) enacted legislation to adopt certain components of Pillar 2 beginning in 2024 (including the European Union Member States) with delayed adoption of other components; or (ii) announced their plans to enact legislation in future years. We continue to evaluate the impacts of enacted and pending legislation related to Pillar 2 in our non-US tax jurisdictions.

SEGMENT RESULTS

The summary that follows provides a discussion of the results of operations of our segments: Consumer Products, Wizards of the Coast & Digital Gaming and Entertainment. Corporate and Other, which does not meet the criteria to be an operating segment, provides management and administrative services to the Company's principal reporting segments and consists of unallocated corporate expenses and administrative costs and activities not considered when evaluating segment performance as well as certain assets benefiting more than one segment.

36

Table of Contents

The following table presents net external revenues and operating profit (loss) for the Company's reportable segments for 2024 and 2023:

Consumer Products Segment

The following table presents the Consumer Products segment net revenues by major geographic region for 2024 and 2023:

Consumer Products segment net revenues decreased 12% in 2024 compared to 2023 primarily driven by exited businesses, including out-licensing certain brands, shifts in product mix, reduced closeout sales as a result of last year's inventory clean up initiatives, and broader industry trends, . The net revenue decrease primarily reflects lower net revenues from NERF, STAR WARS and MARVEL products, POWER RANGERS, Hasbro Gaming, and TRANSFORMERS. The net revenue decrease from lower net revenues from the Company's products for STAR WARS and MARVEL benefited from a slate of entertainment releases in prior years without a more recent release entertainment release to support revenue in 2024. Additionally, net revenues from TRANSFORMERS products in 2023 were supported by the June 2023 theatrical release of TRANSFORMERS: Rise of the Beasts compared to the late September 2024 theatrical release of Transformers One. These revenue decreases were partially offset by revenue contributions from FURBY products following the Company's reintroduction of the brand and refreshed product line during the second quarter of 2023, BEYBLADE products following the Company's refreshed product line in 2024, and licensing revenue for MY LITTLE PONY trading cards.

Consumer Products segment operating results increased $180.0 million to an operating income of $115.3 million in 2024, compared to an operating loss of $64.7 million in 2023. Operating profit margin increase to 4.5% of net revenues in 2024 from an operating loss margin of 2.2% of net revenues in 2023. The increase in operating profit in 2024 was driven by favorable licensing product mix, supply chain productivity, and cost savings realized from cost savings initiatives, partially offset by the lower sale volumes contributions.

37

Table of Contents

Wizards of the Coast and Digital Gaming Segment

The following table presents Wizards of the Coast and Digital Gaming segment net revenues by category for 2024 and 2023:

Wizards of the Coast and Digital Gaming segment net revenues increased 4% in 2024 compared to 2023. Tabletop Gaming revenue decreased 3% primarily attributable to timing releases for MAGIC: THE GATHERING sets resulting in few releases in 2024 as compared to 2023. Digital and Licensed Gaming increased 22% due to strong demand for MONOPOLY GO!, partially offset by the decrease in net revenue recognized from the digital licensing of Baldur's Gate 3, the DUNGEONS & DRAGONS-based role-playing video game that was released during the third quarter 2023.

Wizards of the Coast and Digital Gaming segment operating profit increased $106.3 million to $632.0 million in 2024, compared to $525.7 million in 2023. Operating profit margin increased to 41.8% in 2024 from 36.1% in 2023. The increase in operating profit was primarily driven by increased net revenues, contributions from higher digital licensing revenue mix, lower royalty expense, and cost savings initiatives.

Entertainment Segment

The following table presents Entertainment segment net revenues by category for 2024 and 2023:

Entertainment segment net revenues decreased 88% in 2024 compared to 2023 driven by lower net revenues as a result of the sale of the eOne Film and TV business during the fourth quarter of 2023.

The Entertainment segment operating loss increased to an operating loss of $1.6 million, compared to an operating loss of $1,911.5 million in 2023. The increase in Entertainment segment operating results in 2024 was driven by non-cash impairment charges in 2023 comprised of a goodwill impairment charge of $1,191.2 million primarily associated Company's eOne Film and TV business; a loss on disposal of business of $539.0 million related to the sale of the eOne Film and TV business; and intangible asset impairment charges of $65.0 million and $51.0 million related to definite-lived intangible assets for the eOne Trademark and PJ MASKS, respectively.

Corporate and Other

In Corporate and Other, the operating losses were $55.7 million in 2024 compared to operating losses of $88.3 million in 2023. Improved operating results in 2024 reflects cost savings realized from cost savings initiatives and a benefit from the net impact of the three non-recurring prior period adjustments recorded during 2024. Refer to Note 1, Summary of Significant Accounting Policies, in our consolidated financial statements for further information on these non-recurring adjustments.

Critical Accounting Policies and Significant Estimates

The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. As such, management is required to make certain estimates, judgments and assumptions that it believes are reasonable based on information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the periods presented. The critical accounting policies which management believes are the most critical to aid in fully understanding and evaluating the Company’s reported financial results include the recoverability of goodwill and intangible assets and income taxes.

38

Table of Contents

Recoverability of Goodwill and Intangible Assets

Goodwill and other intangible assets include the cost of the acquired business in excess of the fair value of the tangible net assets recorded in connection with each acquisition. We assess goodwill and other intangible assets with indefinite lives for impairment each year, or more frequently if events or changes in circumstances indicate an asset may be impaired. For goodwill and indefinite-lived intangible assets, our policy is to assess for impairment as of the beginning of each fiscal fourth quarter. The Company may perform a qualitative assessment and bypass the quantitative impairment testing process, if it is not more likely than not that the carrying value of a reporting unit exceeds its fair value. For other intangible assets with definite lives, we assess for impairment only if events occur that indicate that the carrying amount of an asset may not be recoverable.

Our fiscal year 2024 assessment for impairment of goodwill, with respect to each of its reporting units, was performed using a qualitative approach to determine, as of the date of the assessment, whether it was more likely than not that the fair value of goodwill was less than its carrying value. In performing the qualitative assessment, we identified and considered the significance of relevant key factors, events, and circumstances that affect the fair value of goodwill. These factors include external factors such as macroeconomic, industry, and market conditions, as well as entity-specific factors, such as actual and planned financial performance. Based on our qualitative fiscal year 2024 annual impairment analysis for goodwill, we concluded that it is more likely than not that the fair value of goodwill exceeded its carrying value. See Note 7, Goodwill and Intangible Assets, in our consolidated financial statements for more information on the Company's goodwill.

Our fiscal year 2024 assessment for impairment of indefinite-lived intangible assets was based on a relief from royalty method, including key assumptions such as the long-term growth rates of future revenues, the royalty rate for such revenues, and a discount rate. The fair value of each intangible asset is determined for comparison to the corresponding carrying value. If the carrying value of the asset exceeds its fair value, an impairment loss is recognized in an amount equal to the excess. Based on our fiscal year 2024 annual impairment analysis for indefinite-lived intangible assets, we concluded that the fair value of our indefinite-lived intangible asset exceeded their respective carrying values by substantial margins.

Intangible assets, other than those with indefinite lives, are reviewed for indications of impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. During 2024, there were no triggering events which would indicate the Company's intangible assets were impaired.

Income Taxes

The Company’s annual income tax rate is based on its income, statutory tax rates, changes in prior tax positions and tax planning opportunities available in the various jurisdictions in which it operates. Significant judgment and estimates are required to determine the Company’s annual tax rate and evaluate its tax positions. Despite the Company’s belief that its tax return positions are fully supportable, these positions are subject to challenge and estimated liabilities are established to account for events in which these positions are challenged, and the Company is not successful in defending those challenges. These estimated liabilities, as well as the related interest, are adjusted in light of changing facts and circumstances such as the progress of a tax audit.

In certain cases, tax law requires items to be included in the Company’s income tax returns at a different time than when these items are recognized in the consolidated financial statements or at a different amount than that which is recognized in the consolidated financial statements. Some of these differences are permanent, such as expenses that are not deductible on the Company’s tax returns, while other differences are temporary and will reverse over time, such as depreciation expense. The differences that will reverse over time are recorded as deferred tax assets and liabilities on the consolidated balance sheets. Deferred tax assets represent deductions that have been reflected in the consolidated financial statements but have not yet been reflected in the Company’s income tax returns. Valuation allowances are established against deferred tax assets to the extent that it is determined that the Company will have insufficient future taxable income, including capital gains, to fully realize the future deductions or capital losses. Deferred tax liabilities represent expenses recognized on the Company’s income tax return that have not yet been recognized in the Company’s consolidated financial statements or income recognized in the consolidated financial statements that has not yet been recognized in the Company’s income tax return.

NEW ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements and a discussion of the Company's significant accounting policies see Note 1, Summary of Significant Accounting Policies, in our consolidated financial statements.

39

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically generated a significant amount of cash from operations. The Company has primarily funded its operations and liquidity needs through cash on hand and from cash flows from operations, and when needed, used commercial paper and borrowings under its available lines of credit. As of December 29, 2024, the Company had $695.0 million of Cash and cash equivalents and $3,401.8 million of Long-term debt.

The Company may issue debt or equity securities from time to time, to provide additional sources of liquidity when pursuing opportunities to enhance its long-term competitive position, while maintaining a strong balance sheet. However, unexpected events or circumstances such as material operating losses or increased capital or other expenditures, or the inability to otherwise access the commercial paper market, may reduce or eliminate the availability of external financial resources. In addition, significant disruptions to credit markets may also reduce or eliminate the availability of external financial resources. Although the Company believes the risk of nonperformance by the counterparties to its financial facilities is not significant, in times of severe economic downturn in the credit markets, it is possible that one or more sources of external financing may be unable or unwilling to provide funding to the Company.

Indebtedness and Credit Facilities

As of December 29, 2024, the Company had $3,401.8 million of Long-term debt due at varying times from 2026 through 2044. In May 2024, the Company issued an aggregate of $500.0 million of senior unsecured debt securities that bears a fixed interest of 6.05% due 2034 (the "2034 Notes"). Proceeds from the 2034 Notes, along with existing cash available, were utilized to repay the aggregate of $500.0 million of 3.00% Notes Due 2024 (the "2024 Notes").

The Company's third amended and restated revolving credit agreement with Bank of America, N.A. maturing September 5, 2028 (the "Amended Revolving Credit Agreement"), provides the Company with a maximum aggregate principal amount of $1.25 billion and also provides for a potential additional incremental commitment increase of up to $500.0 million subject to agreement of the lenders. The Amended Revolving Credit Agreement contains certain financial covenants setting forth leverage and coverage requirements, and certain other limitations typical of an investment grade facility, including with respect to liens, mergers and incurrence of indebtedness. The Company was in compliance with all covenants as of December 29, 2024. The Company had no borrowings outstanding under its committed revolving credit facility as of December 29, 2024. However, letters of credit outstanding under this facility were approximately $3.7 million. Amounts available and unused under the committed line, as of December 29, 2024 were approximately $1.25 billion, inclusive of borrowings under the Company’s commercial paper program. The Company also has other uncommitted lines from various banks, of which approximately $7.6 million was utilized in the form of letters of credit, on December 29, 2024.

The Company has a supplier finance program which provides participating suppliers the option of receiving payment in advance of an invoice due date, to be paid by certain administering banks, on the basis of invoices that the Company has confirmed as valid and approved. The Company’s obligation is to make payment in the invoice amount negotiated with participating suppliers, to the administering banks on the invoice due date. The Company’s suppliers are not required to participate in the supplier finance program. The early payment transactions between the Company’s supplier and the administering bank are subject to an agreement between those parties, and the Company does not participate in any financial aspect of the agreements between the Company’s suppliers and the administering banks. The Company has not pledged any assets to the administering bank under the supplier financing program. The Company or the administering bank may terminate the agreement upon at least 30 days’ written notice. The amount of obligations confirmed under the supplier finance program that remain unpaid were $66.2 million, and $43.3 million as of December 29, 2024 and December 31, 2023, respectively. These obligations are presented within Accounts payable in the Company's Consolidated Balance Sheets. The activity related to this program is reflected within the operating activities section of the Consolidated Statements of Cash Flows

From time to time, the Company or its affiliates may seek to retire or purchase outstanding debt through cash purchases, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. During 2024, the Company repurchased $83.1 million of its 2026 Notes.

See Note 11, Long-Term Debt and Other Financing, in our consolidated financial statements for additional information on outstanding long-term debt and credit facilities.

40

Table of Contents

Cash Flow

The following table presents the cash flow activities for 2024 and 2023:

Operating Activities:

Cash flows provided by operating activities were $847.4 million in 2024 as compared to $725.6 million in 2023. The increase in net cash provided by operating activities during 2024 after adjusting for non-cash items, was primarily attributable to improved net earnings in 2024 compared to 2023, and working capital benefits, primarily due to lower investments in entertainment content compared to 2023 as a result of the sale of the eOne Film and TV business, and reduced inventory due to management inventory initiatives.

Investing Activities:

Net cash flows utilized for investing activities was $203.7 million in 2024 compared to net cash flows provided by investing activities of $117.6 million in 2023. Investing activities in 2024 primarily reflects $571.0 million of purchases of short-term investments from proceeds of the issuance of the 2034 Notes, $583.0 million maturity of short-term investments used to repay the 2024 Notes, $87.2 million of additions of property, plant, and equipment, and $110.3 million for software development additions. Investing activities in 2023 primarily reflect net proceeds of $329.6 million from the sale of the eOne Film and TV Business, $135.5 million of additions of property, plant, and equipment, and $73.8 million for software development additions.

We expect total cash capital expenditures in fiscal year 2025 to be between $225 million and $250 million. We expect to fund our capital expenditures with available cash or cash generated from operations.

Financing Activities:

Net cash utilized by financing activities was $497.5 million and $818.1 million in 2024 and 2023, respectively. Financing activities in 2024 primarily include $498.6 million of proceeds from issuance of the 2034 Notes, dividends paid of $389.9 million, repayments of long-term debt of $581.3 million related to the 3% Notes due 2024 of $500 million and the repurchase of $83.1 million of its Notes due 2026, and $14.4 million of payments related to tax withholdings for stock compensation coinciding with equity award vesting activity.

Financing activities in 2023 primarily include repayments of long-term debt of $359.6 million primarily related to the repayment of debt in connection with the sale of the eOne Film and TV Business, dividends paid of $388.0 million, and $16.8 million of payments related to tax withholdings for stock compensation coinciding with equity award vesting activity.

Contractual Obligations and Commitments

The Company’s cash requirements within the next twelve months include accounts payable and accrued liabilities, other current liabilities, and purchase commitments and other obligations. We expect the cash required to meet these obligations to be primarily generated through a combination of cash from operations and access to capital from financial markets. Our long-term cash requirements under our various contractual obligations and commitments include:

•Debt – See Note 11, Long-Term Debt and Other Financing, in our consolidated financial statements for further detail of our debt, including letters of credit, and the timing of expected future principal payments.

•Operating lease obligations – Note 17, Leases, in our consolidated financial statements for further detail of our obligations and the timing of expected future payments.

•Pension plans and other postretirement benefit contributions – We sponsor a defined benefit plan that pays benefits to eligible employees at retirement. In addition, we provide certain postretirement health and welfare benefits to eligible retirees and their dependents. See Note 16, Retirement Plans, in our consolidated financial statements for further detail of our obligations and the timing of expected future payments.

•Minimum Guarantee Payments – The Company enters into license agreements with strategic partners, inventors, designers and others for the use of intellectual properties in its products. Certain of these

41

Table of Contents

agreements contain provisions for the payment of guaranteed or minimum royalty amounts. See Note 20, Commitments and Contingencies, in our consolidated financial statements for further detail of our obligations and the expected timing of expected future payments.

•Purchase and Other Obligations – The Company also has various third-party, inventory and tooling purchase commitments in the ordinary course of business. See Note 20, Commitments and Contingencies, in our consolidated financial statements for further detail of our obligations and the expected timing of expected future payments.

•Uncertain Tax Positions – As of December 29, 2024, the Company has a liability of $45.6 million of potential tax, interest and penalties for uncertain tax positions that have been taken or are expected to be taken in various income tax returns. The Company does not know the ultimate resolution of these uncertain tax positions and as such, does not know the ultimate amount or timing of payments related to this liability.

We believe the following sources will be sufficient to meet our anticipated cash requirements for at least the next twelve months, while maintaining sufficient liquidity for normal operating purposes:

•Our cash flow from operations;

•The availability of additional capital under our commercial paper program or lines of credit; and

•Our availability to access capital from financial markets.

Financial Risk Management

The Company is exposed to market risks attributable to fluctuations in foreign currency exchange rates primarily as the result of sourcing products priced in U.S. dollars, Hong Kong dollars and Euros while marketing and selling those products in more than twenty currencies. Results of operations may be affected primarily by changes in the value of the U.S. dollar, Euro, British pound sterling, Canadian dollar, Brazilian real, and Mexican peso and, to a lesser extent, other currencies in Latin American and Asia Pacific countries.

To manage this exposure, the Company has hedged a portion of its forecasted foreign currency transactions using foreign exchange forward contracts and foreign exchange option contracts. At December 29, 2024, the Company estimates that a hypothetical immediate 10% depreciation of the U.S. dollar against all foreign currencies included in these foreign exchange forward contracts could result in an approximate $15.1 million decrease in the fair value of these instruments. A decrease in the fair value of these instruments would be offset by increases in the value of the forecasted foreign currency transactions.

The Company is also exposed to foreign currency risk with respect to its net cash and cash equivalents or short-term borrowing positions in currencies other than the U.S. dollar. The Company believes, however, that the on-going risk on the net exposure should not be material to its financial condition. In addition, the Company’s revenues and costs have been and will likely continue to be affected by changes in foreign currency rates. A significant change in foreign exchange rates can materially impact the Company’s revenues and earnings due to translation of foreign-denominated revenues and expenses. The Company does not hedge against translation impacts of foreign exchange. From time to time, affiliates of the Company may make or receive intercompany loans in currencies other than their functional currency. The Company manages this exposure at the time the loan is made by using foreign exchange contracts.

The Company reflects all derivatives at their fair value as an asset or liability on the Consolidated Balance Sheets. The Company does not speculate in foreign currency exchange contracts. At December 29, 2024, these contracts had net unrealized gains of $0.5 million, of which $1.7 million are recorded in Prepaid expenses and other current assets, $1.2 million are recorded in Accrued liabilities. Included in Accumulated other comprehensive loss at December 29, 2024 are deferred losses of $4.4 million, net of tax, related to these derivatives.

At December 29, 2024, the Company had fixed rate long-term debt of $3,401.8 million. The Company does not have any interest rate swaps on its existing long-term debt.

Industry Trends, the Economy and Inflation

The principal market for the Company’s toys and games and licensed consumer products is the retail sector. Revenues from the Company’s top five retail customers, accounted for approximately 36% of its consolidated net revenues in 2024. The Company monitors the creditworthiness of its customers and adjusts credit policies and limits as it deems appropriate.

The Company’s revenue pattern continues to show the second half of the year to be more significant to its overall business for the full year. In 2024 approximately 58% of the Company’s full year net revenues were recognized in the second half of the year. The Company expects that this concentration will continue. The concentration of sales in the second half of the year increases the risk of (a) underproduction of popular items, (b) overproduction of less popular items, and (c) failure to achieve tight and compressed shipping schedules. The business of the Company is

42

Table of Contents

characterized by customer order patterns which vary from year to year largely because of differences in the degree of consumer acceptance of a product line, product availability, marketing strategies, inventory levels, policies of retailers and differences in overall economic conditions. Larger retailers generally maintain lower inventories throughout the year and purchase a greater percentage of product within or close to the fourth quarter holiday consumer buying season, which includes Christmas. Quick response inventory management practices being used by retailers as well as growth in ecommerce result in orders increasingly placed for immediate delivery and fewer orders placed well in advance of shipment. Retailers are timing their orders so that they are filled by suppliers closer to the time of purchase by consumers. To the extent that retailers do not sell as much of their year-end inventory purchases during this holiday selling season as they had anticipated, their demand for additional product earlier in the following fiscal year may be curtailed, thus negatively impacting the Company’s future revenues. The Company is continuing to manage inventory levels and by monitoring consumer purchase patterns to ensure adequate supply of new product while clearing excess supply to mitigate the risk of inventory obsolescence.

In addition to these inventory management challenges, the bankruptcy or other lack of success of one of the Company’s significant retailers could negatively impact the Company’s future revenues.

Unlike the Company's retail sales patterns, revenue patterns from the Company's entertainment businesses fluctuate based on the timing and popularity of content releases. In addition, entertainment business operating results fluctuate due to expenses recorded in relation to productions and content such as program amortization costs and advertising expenses, which are incurred and recognized, beginning prior to initial releases and then continue throughout the related distribution windows.

Inflation

The impact of inflation on the Company's business operations was significant during 2024. The Company monitors the impact of inflation to its business operations on an ongoing basis and may need to implement actions such as price adjustments to mitigate the impact of changes to the rate of inflation in future periods. However, future volatility of general price inflation could affect consumer spending. Additionally, the impact of inflation on costs and availability of materials, costs for shipping and warehousing and other operational overhead, could adversely affect the Company's financial results.