Derivative Financial Instruments

9 Months Ended

Sep. 29, 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 September 29, 2024, October 1, 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:


	September 29, 2024				October 1, 2023				December 31, 2023
Hedged transaction	Notional Amount		Fair Value		Notional Amount		Fair Value		Notional Amount		Fair Value
Inventory purchases	$	164.7	$	1.3	$	194.4	$	3.4	$	129.9	$	(1.7)
Sales	104.6		(3.2)		113.4		0.8		89.7		(0.2)
Royalties and Other	26.4		1.5		70.5		(0.9)		31.7		(0.5)
Total	$	295.7	$	(0.4)	$	378.3	$	3.3	$	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 September 29, 2024, October 1, 2023 and December 31, 2023 as follows:


	September 29, 2024		October 1, 2023		December 31, 2023
Prepaid expenses and other current assets
Unrealized gains	$	3.1	$	5.9	$	0.5
Unrealized losses	(0.2)		(2.0)		(0.1)
Net unrealized gains	$	2.9	$	3.9	$	0.4

Other assets
Unrealized gains	$	0.5	$	1.5	$	—
Unrealized losses	—		(0.1)		—
Net unrealized gains	$	0.5	$	1.4	$	—

Accrued liabilities
Unrealized gains	$	1.0	$	0.4	$	0.7
Unrealized losses	(4.0)		(2.4)		(3.5)
Net unrealized losses	$	(3.0)	$	(2.0)	$	(2.8)

Other liabilities
Unrealized gains	$	0.1	$	—	$	—
Unrealized losses	(1.0)		—		—
Net unrealized losses	$	(0.9)	$	—	$	—

Net gains (losses) on cash flow hedging activities have been reclassified from other comprehensive earnings (loss) to net earnings for the three and nine months ended September 29, 2024 and October 1, 2023 as follows:


	Three Months Ended				Nine Months Ended
	September 29, 2024		October 1, 2023		September 29, 2024		October 1, 2023
Statements of Operations Classification
Cost of sales	$	(0.6)	$	1.8	$	(0.7)	$	0.5
Net revenues	0.8		(0.1)		1.4		(0.2)
Other	(0.3)		1.2		—		1.7
Net realized (losses) gains	$	(0.1)	$	2.9	$	0.7	$	2.0

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 September 29, 2024, October 1, 2023 and December 31, 2023, the total notional amounts of the Company's undesignated derivative instruments were $267.4 million, $807.5 million, and $340.5 million, respectively.

At September 29, 2024, October 1, 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:


	September 29, 2024		October 1, 2023		December 31, 2023
Prepaid expenses and other current assets
Unrealized gains	$	—	$	10.7	$	0.3
Unrealized losses	—		(7.7)		—
Net unrealized gains	$	—	$	3.0	$	0.3

Accrued liabilities
Unrealized gains	$	0.2	$	—	$	1.4
Unrealized losses	(2.2)		(0.1)		(2.5)
Net unrealized losses	$	(2.0)	$	(0.1)	$	(1.1)

The Company recorded a net gain of $4.5 million and a net gain of $8.7 million for three and nine months ended September 29, 2024, respectively, and net gains of $15.1 million and $26.4 million, three and nine months ended October 1, 2023, respectively, on these instruments to Other (income) expense, net 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).