Insiders ranked by realized 90-day signed return on their open-market trades at Hasbro, Inc.. Minimum 3 scored trades. Returns are signed - a sale followed by a rally counts against the insider.
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.00pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Real-time Form 4 intelligence. Smarter insider tracking.
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.00pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+5
failure+3
disrupt+3
challenges+2
monopoly+2
Positive rising
strong+5
profitability+3
opportunities+3
win+3
highest+3
Risk Factors (Item 1A)
18,130 words
RISK FACTORS SUMMARY
We are subject to a variety of risks and uncertainties, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. These include strategic, operational, global economic, financial, governmental, regulatory and legal risks related to our business. Risks that we deem material are described under “Risk Factors” in Item 1A of this Form 10-K. These risks include, but are not limited to, the following:
Strategic Risks
• We may not successfully implement and execute our business strategy, including delivering on our digital gaming strategy, returning our toy business to growth and increased profitability, and continuing to grow our licensing business.
• Our business may suffer if we are unable to successfully develop, publish and commercialize digital games.
• Our licenses from third parties may not be profitable or generate significant revenues or royalties for us if licensed material does not achieve sufficient market appeal.
• Our business may if licensees of our brands to their obligations to us or engage in actions that put us at risk.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
losses+5
impairment+4
declines+3
monopoly+2
against+2
Positive rising
opportunities+4
gains+2
strong+2
highest+2
effective+1
MD&A (Item 7)
8,699 words
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. Refer to “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 2025 and 2024. For a comparison of our consolidated results of operations for fiscal years 2024 and 2023, refer to 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 29, 2024, filed with the SEC on February 27, 2025. 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 years ended December 28, 2025 and December 29, 2024 were both fifty-two week periods.
• Consumer interests change quickly, making it difficult to develop innovative and successful products. We may not successfully develop products that generate sufficient consumer interest. Consumers may prefer the products and games offered by our competitors to those we offer, harming our business and results.
• We may not achieve all of our anticipated cost-savings, which may impact our ability to operate efficiently and profitably.
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• The industries in which we compete are highly competitive, with low barriers to entry. Artificial intelligence is likely to result in increased competition in the markets in which we compete.
• Acquisitions, licenses, dispositions and other investments we complete may not provide us with the benefits we expect, or the realization of such benefits may be significantly delayed.
Operational Risks
• Our business may be harmed by the imposition or threat of tariffs, including reciprocal or retaliatory tariffs, in markets in which we operate which could increase our product costs and other costs of doing business, reduce or delay purchases, impact consumer spending, or lower our revenues and earnings.
• We may be unable to develop, introduce and ship products on a timely and cost-effective basis, or we may be unable to successfully navigate through global supply chain challenges.
• We may be unable to successfully adapt to the increasing importance of direct-to-consumer sales.
• Our customer base remains highly concentrated, making us susceptible to the success of their businesses.
• Our substantial business, sales and manufacturing operations outside the U.S. subjects us to risks of international operations, including the risk and impact of current, potential, retaliatory or reciprocal tariffs on our products.
• Our reliance on third-party manufacturers, particularly in China, presents risks to our business.
• Our digital games and entertainment offerings may be dependent on third-party studios, content producers and distribution channels.
• Outsourcing of certain key operations or business functions to one or more third-parties creates risks relating to dependence on third parties.
• If we lose key management or other employees or are unable to attract and retain talented people with the skill sets we need for our diverse and evolving business, our business may be harmed.
• Our business may be harmed if we are unable to protect our critical intellectual property rights.
• As we incorporate AI tools into aspects of our business, including product and game development, we may face increased costs, operational complexity, IP and data governance challenges, and evolving regulatory requirements, any of which could adversely affect timelines, quality, or expected returns on investment.
• Failure to successfully operate our information technology systems, or if our electronic data is compromised, our business may be harmed.
Global and Economic Risks
• Changes in U.S., global or regional political or economic conditions can harm our business, such as inflation, tariffs, rising interest rates and unemployment rates, as well as the markets in which we and our employees, consumers, customers, suppliers and manufacturers operate. Such changes can also adversely impact discretionary consumer spending.
• Public health crises have had and may continue to have an adverse effect on our business, including harming our ability to source and ship products in a timely and cost-effective manner.
Financial Risks
• Seasonality in our business may cause our quarterly and annual operating results to fluctuate.
• Impairment charges related to goodwill and intangible assets and other long-term assets could harm our results.
• Our financial performance can be impacted by changes in foreign currency rates due to our global business.
• Our indebtedness may limit our availability of cash, cause us to divert cash to fund debt service payments or make it more difficult to take certain other actions.
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• We may be unable to obtain or service our external borrowings, or restrictions imposed by such borrowings may be burdensome.
• Our effective tax rate may vary due to changes in or differing tax law and rules in the territories we operate.
Governmental, Regulatory and Legal Risks
• If we were to violate laws or regulations applicable to our business, our business could be harmed.
• We could be the subject of product liability suits, product recalls or claims relating to media content, any of which could harm our business.
• From time to time, we may be involved in other litigation and similar matters which may entail significant expense or otherwise adversely impact our business.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business, financial condition, results of operations and cash flows.
PART I
Except as expressly indicated or unless the context otherwise requires, as used herein, “Hasbro”, the “Company”, “we”, or “us”, means Hasbro, Inc., a Rhode Island corporation organized on January 8, 1926, and its subsidiaries.
Item 1. Business.
Overview
Hasbro, Inc. (“Hasbro”) is a leading game, intellectual property ("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 to kids, families, and fans around the world, through physical and digital games, video games, toys, licensed consumer products, location-based entertainment, film, TV and more.
Through our franchise-first approach, we unlock value from both new and legacy IP, including MAGIC: THE GATHERING, MONOPOLY, HASBRO GAMES, PLAY-DOH, TRANSFORMERS, DUNGEONS & DRAGONS, NERF, and PEPPA PIG, as well as premier partner brands. Powered by our portfolio of iconic brands and a diversified network of partners and subsidiary studios, we bring fans together wherever they are, from tabletop to screen.
For more than a decade, Hasbro has been consistently recognized for its corporate citizenship, including being named one of the 100 Best Corporate Citizens by 3BL Media, a 2025 JUST Capital Industry Leader, one of the 50 Most Community-Minded Companies in the U.S. by the Civic 50, and a Brand that Matters by Fast Company.
Recent Developments
Fiscal year 2025 was a year of strong results, driven by our continued execution on our Playing to Win strategy and cost-savings initiatives.
2025 Business Results
We finished 2025 with strong momentum, led by another record performance in our Wizards of the Coast and Digital Gaming segment, continued growth in licensing, and operating profit improvement across the Company.
• MAGIC: THE GATHERING had a record year, supported by the success of its Universes Beyond sets such as Avatar: The Last Airbender and Final Fantasy , which was the highest selling set of all-time based on net revenues. Edge of Eternities and Marvel's Spider-Man also contributed to performance as well as high demand for our backlist sets and Secret Lair offerings.
• Digital licensing was once again led by Monopoly Go!, a mobile game from our partners at Scopely, Inc., and remains a meaningful contributor to licensing revenues.
• In our Consumer Products segment, we saw solid performance from BEYBLADE, TRANSFORMERS and Hasbro Gaming, as well as success from recent innovation, such as the announcement of Baby Evie joining PEPPA PIG. In addition, we saw strongsuccess from partner licensed brands, such as MARVEL.
• Licensing in our Consumer Products segment continues to drive strong operating profit.
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Operational Excellence Program
In 2025, we continued to execute on our Operational Excellence program, an ongoing enterprise-wide cost-savings initiative that includes targeted cost-savings, supply chain transformation and certain other restructuring actions designed to drive growth and enhance shareholder value. Through 2025, we have delivered almost $800 million of gross cost savings and are well on our path to our previous $1.0 billion commitment.
Our Mission and Strategy
Our mission is to create joy and community through the magic of play, a universal need that lies at the heart of our brands.
Games, IP, and toys each play an important role in driving our play-focused mission. Toys are often the first handshake we have with consumers, providing an opportunity for consumers at all ages to enjoy our brands. Games offer consumers additional channels to experience our brands, both in traditional format and through digital games. Licensing our intellectual property and strategic partnerships provide further opportunities to extend the reach of our brands across digital games, consumer products categories, entertainment, location-based experiences, and more. We believe our diversified portfolio positions us for continuous and extended reach with consumers and long-term growth.
We are Playing to Win. In 2025, we launched our refreshed strategy, "Playing to Win," to refocus the Company on inspiring a lifetime of play across more categories, more partners, and more ways to engage. Through play fueled brand engagement and partner scaled co-investment, including video games, artificial intelligence ("AI") enabled entertainment, and licensing, we plan to expand our consumer reach as a games, IP, and toy company. We seek to be one of the most profitable and diverse toy and game companies globally, powered by gamified, entertainment-driven, multi-purchase, multi-generational franchises. To significantly extend our consumer reach and drive for revenue and profit growth, we are focusing on five key strategic building blocks:
• Anytime is Playtime : Focus on winning play occasions and distribution point by making our brands accessible, relevant, and engaging wherever, whenever, and however consumers choose to play.
• Aging Up : Expand our consumer base and drive play and collectible experiences for fans of all ages, recognizing that consumers aged 13 and above are gaining purchase share.
• Everyone Plays: Engage across the play spectrum to where we under-index and capture new consumers across demographics and markets.
• Digital and Direct: Embrace new ways to engage with our consumers through video games, digital technology and direct-to-consumer interactions.
• Partner Scale: Capitalize on our partners’ investments and scale to enhance our brands through strategic relationships and licensing arrangements.
As part of our Playing to Win strategy, we have realigned our brand portfolios to correspond our refreshed strategy:
• Grow Brands : Brands representing the highest margin, highest growth opportunities in categories where we see significant share and/or underlying market growth.
• Optimize Brands : Brands representing opportunities to maintain or grow share while improving operating profit returns.
• Reinvent Brands : Brands representing opportunities to reinvent or restructure to drive innovation and improved operating profit returns.
Brands periodically are reclassified, based on changes in growth, profitability or other characteristics, and when those changes occur, the respective portfolio historical revenue is included within the new classification.
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Our Business: Games, IP, and Toys. We operate in three lines of business: games, IP, and toys, each playing a role in driving our play-focused mission.
Games
IP – Licensing & Entertainment
Toys
Our high profit, high growth investment center. As consumers embrace digital, our game portfolio offers new channels to express our brands.
Our capital-light, partner scale opportunity. Licensing drives our brands across consumer product categories, screens and experiences.
Our first handshake with consumers; a cash generative business in a stable category driven by brands, innovation and licenses.
As a Company, we possess three competitive advantages: 1) a broad and deep brand portfolio rooted in play; 2) one of the biggest and most diverse licensing businesses in the world and 3) a profitable games business anchored by MAGIC: THE GATHERING, DUNGEONS & DRAGONS, MONOPOLY, and Hasbro gaming classics.
Our competitive advantages reinforce one another. Our toy and game brands fuel our licensing business. Our licensing business delivers substantial investment from third-parties which strengthen our brands and our bottom line. Our games business adds further strength to our balance sheet giving us the investment dollars to upgrade core capabilities like design, supply chain, and marketing and gives us new ways to expand our brands’ reach, particularly in digital.
Operational Excellence: Transforming Hasbro. We are midway through a transformation. Over the past several years our initiatives have focused on:
• Reinvigorating licensing by expanding into new partnerships across toys, gaming and experiences and by strengthening existing partnerships with key partners, including the extension of our agreement with The Walt Disney Company.
• Accelerating digital initiatives and digitally-orientated partnerships.
• Right-sizing our organizational structure.
• Reducing complexity across the business, including significantly reducing SKU count, reducing owned inventory levels and reducing the cost structure.
• Divestiture of the non-core film and TV business of eOne (as defined below) which returned “play” to the center of our mission and investment priorities, ultimately reducing content spend by over 90%.
We are continuing to transform the business by upgrading our systems and talent with an emphasis on:
• Rapid adoption of AI, including launching new enabled services and digital solutions to innovate, improve operational efficiency, and go to market digitally.
• Modernizing how we design and develop products and work with manufacturers to improve the time to market, improve agility and reduce costs.
• Process and systems modernization across IT, accounting, finance and HR.
• Supply chain excellence to continue improving predictability, costs and services across the network.
• Establishing an inspired workforce with a performance culture built on solid fundamentals, strong values and bar-raising feedback.
• Build a real "test and learn" engine to enable ideas to move from concept to market with speed, evidence and consumer co-creation.
Our Brand Portfolio. Below is a summary of the brands and business models where we compete.
• Toys and Games . We market and sell toys and games based on our owned and controlled brands globally at retail stores, through ecommerce platforms and through our fan-based direct-to-consumer platforms Hasbro PULSE and SECRET LAIR. Our key brands include:
• MAGIC: THE GATHERING
• MONOPOLY
• HASBRO GAMES
• PLAY-DOH
• TRANSFORMERS
• DUNGEONS & DRAGONS ("D&D")
• NERF
• PEPPA PIG
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Additionally, through license agreements with third parties, we develop and sell products based on popular third-party brands through these channels. Key brands include:
• MARVEL, including SPIDER-MAN and THE AVENGERS (1)
• LUCASFILMS' STAR WARS (1)
• BEYBLADE
• Final Fantasy, Avatar: The Last Airbender , and Fallout, which collaborate with our MAGIC collectibles through SECRET LAIR projects
(1) Owned by The Walt Disney Company (“Disney”).
Our products include a wide range of games, trading cards and collectibles, action figures, arts and crafts and creative play products, dolls, play sets, preschool toys, plush products, vehicles and toy-related specialty products, sports action products and accessories and many other consumer products which represent an array of internationally recognizable brands that capture the imagination of our consumers worldwide.
Our gaming business continues to transform game play with new and innovative games and play experiences. To successfully execute our gaming strategy, we focus on brands that capitalize on existing trends while evolving our approach using consumer insights and data analytics, technology advancements and offering game-play experiences addressed to consumer demand for face-to-face, trading card and digital game experiences played as board, off-the-board, digital, electronic, trading card and role-playing games.
Our subsidiary, Wizards of the Coast (“Wizards”), is a critical part of our gaming business, driving innovation and growth through its popular role-playing and fantasy card-collecting games. These games include:
• MAGIC: THE GATHERING, one of the original collectible card games, is a strategic trading card game with compelling characters in multiple universes that continue to expand through new card sets, including Universes Beyond sets with well-known third-party brands such as Final Fantasy, Avatar: The Last Airbender , and Marvel's Spider-Man , released in 2025. Over the past several years, the MAGIC product line has been able to expand its user base with sets developed for existing and new play groups, including competitive players, casual, social players, collectors, digital players, and fans of "adjacent" universes.
• DUNGEONS & DRAGONS, one of the world’s most popular tabletop role-playing games, is a cooperative, storytelling game where players take on the roles of different characters within a story. There are dice and basic rules involved, along with maps and miniatures or tokens, but the tools that come into play most often are the imaginations of the players.
Our other iconic game brands include long-time favorites such as MONOPOLY, JENGA, CONNECT 4, THE GAME OF LIFE, SCRABBLE, CLUE and TRIVIAL PURSUIT, as well as many other well-known game brands and newer games that are geared toward a mature consumer.
• Digital Gaming . Key to our success is the continued investment in and growth and development of our digital gaming business, including development of AAA and AA games, games as a service and licensed games. Spanning action role-playing games for web-based play, PC and gaming consoles, and Hasbro branded mobile application-based games, our digital gaming business helps to unlock the full value of our brands to achieve our mission of storytelling and bringing our brands to life. Recent examples include:
• the popularMONOPOLY GO! free-to-play mobile game, released in 2023 by Scopely, Inc., based on the classic board game, MONOPOLY;
• the 2023 release of Baldur's Gate 3, the DUNGEONS & DRAGONS-based role-playing video game from our partners at Larian Studios which won several awards, including Game of the Year at the 10th annual Game Awards; and
• the internal development of a variety of digital games, including EXODUS, a sci-fi role-playing game, and WARLOCK: DUNGEONS & DRAGONS, an original third person single-player action-adventure game, both of which currently in development for PC, PlayStation 5 and Xbox, and are expected to be released in 2027.
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• the developed and launched digital version of the MAGIC: THE GATHERING card game , Magic: The Gathering Arena and its related mobile application, both of which complement the Company's direct-to-customer relationships with our new and long-time MAGIC: THE GATHERING fan-base.
Developing and publishing our own games requires a substantial amount of time and investment, and there are risks that the games we develop will not be successful. We believe, however, that our brands and characters together with our studios and partners provide us a competitive edge and this has the potential to be a high growth area for us.
• Licensing IP . Hasbro is one of the world’s largest and most diverse licensors, and a growing part of our Playing to Win strategy is to extend the reach of our brands through the out-licensing of our intellectual properties to third parties for consumer products, digital games and entertainment.
• Consumer Products Licensing : We license our intellectual property for a variety of consumer promotional events and products, including apparel, publishing, home goods and electronics, or in certain situations, toy products where the out-licensing of brands is more effective and profitable than developing and marketing the products ourselves. A recent example of this includes a return of MONOPOLY at McDonald's for the first time in a decade, which featured a new digital-first format, and a resurgence from MY LITTLE PONY through licensing across merchandising categories, music, and trading card products.
• Digital Games Licensing : We out-license certain of our brands to other third-party digital game developers who transform Hasbro brand-based characters and other intellectual properties into digital gaming experiences such as MONOPOLY GO! and Baldur's Gate 3. In addition, a new slate of multi-year licensing partnerships was announced in 2025 that expand Hasbro's presence on the casino floor. These partnerships provide access to new entertainment experiences that reimagine our brands in bold, exciting ways for a growing base of adult fans and gamers.
• Location-Based Entertainment : Location-based entertainment focuses on licensing our brands across multiple verticals, including, but not limited to, theme parks, water parks, hotels and resorts, family entertainment centers, retail, dining and entertainment, shows, exhibits and exhibitions such as TRANSFORMERS at multiple Universal Studios theme parks, seven Peppa Pig Theme Parks and several Peppa Pig World of Play experiences with Merlin Entertainment, and Hasbro City, a Hasbro-themed family entertainment center located in Paseo Interlomas, Mexico featuring thrilling theme park rides and experiences, live shows, food and beverage options and the region's first Hasbro-themed retail location. These experiences bring our brands to life and further immerse our consumers in our storytelling in a capital efficient manner as the third-parties operating these experiences are making the investment in these initiatives.
• Entertainment . Reinforcing storylines associated with our owned and controlled brands through entertainment mediums, including television, film, digital content and other programming is our primary entertainment strategy. With our cross-platform capabilities, our entertainment business leverages film and television production and sales, digital content and children's programming to create compelling entertainment and drive creativity and overall awareness across brands with merchandising and licensing tie-ins. Principal brands include PEPPA PIG and MY LITTLE PONY whose content entertains children worldwide and generates revenues through licensing and merchandising programs across multiple retail categories. New in 2025 was the arrival of baby Evie, who joined Peppa and George as the newest member of the PEPPA PIG family during a cinematic event that featured the reveal of ten new episodes and six new songs.
• Hasbro Direct . Our Hasbro Direct business adopts a "Fans Come First" approach, intended to create direct connections with our consumers. It includes the following platforms:
• Magic: The Gathering Arena – the free-to-play online adaptation of the MAGIC: THE GATHERING card game where players can explore the fantasy worlds, play a variety of game formats to collect cards and test skills against friends and other players around the world, or participate in in-game tournaments. This game continues to be enhanced and has helped expand the user base of MAGIC players.
• SECRET LAIR – our internet-based storefront where MAGIC: THE GATHERING fans can purchase exclusive and limited versions of cards.
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• D&D Beyond – the premier digital content platform for DUNGEONS & DRAGONS where fans can access online versions of official rule books, character sheets and catalogs, adventures, and other digital tools such as character builders and official D&D content available for purchase.
• Hasbro PULSE – Hasbro's ultimate fan ecommerce destination and sales platform, where fans get exclusive access to behind-the-scenes content, limited run and special edition collectibles and action figures, and other crowd-funded projects that bring dream products into premium reality.
With these platforms, we are expanding and enhancing our capabilities beyond traditional ecommerce to serve our consumers and activate brands. Connecting with fans directly makes our products more accessible in more markets and enables us to sell brands and showcase selected items, creating more brand awareness while gaining a deeper understanding of our fans and what they want and expect from Hasbro.
• Other Elements of our Strategy . Other aspects of our strategy that help drive our consumer reach and storytelling experiences include digital content. We understand the importance of digital content to drive fan engagement, including in gaming and across other media, and of integrating such content with our products. Digital media encompasses digital gaming applications and the creation of digital environments for traditional products through the use of complementary digital applications, social media and websites which extend storylines and enhance play.
Product Development and Royalties
Development
Our success is dependent on continuous innovation in our play offerings and requires ongoing development of new brands and products alongside the redesign of existing products to drive consumer interest and market acceptance. Our products are developed by a global development function, which is responsible for the development, design and engineering of new products and their packaging along with the innovation, improvement or modification of ongoing products. Much of this work is performed by our internal staff of designers, artists, model makers and engineers. The pace of change in innovation and complexity of our product offerings is expected to continue to evolve as we adopt artificial intelligence in the development of new brands and products.
In addition to the design and development work performed by our own staff, we work with a number of independent toy and game designers and compete for their designs and ideas with other toy and game manufacturers. Rights to such designs and ideas, when acquired or licensed by us, are usually exclusive for particular categories and the agreements generally require us to pay the designer a royalty on our net sales of the item. These designer licensing agreements may also provide for advance royalties and minimum guarantees.
Finally, our continued investment in digital gaming is considered a key growth engine to expand our reach in the world of play. As of December 28, 2025, we have four internally owned and operated gaming studios working on a mixture of titles that will both introduce fans to new worlds and franchises, as well as further connect and immerse fans with existing IP. We have also entered into key partnerships with external studios, in an effort to leverage their expertise to bring our brands to life in new, unique ways.
Royalties and Participations
We produce an array of products under licenses based on our partners’ trademarks and copyrights for the names or likenesses of characters from movies, television shows and other entertainment media. We compete with other toy and game manufacturers for these licensed rights. Licensing fees for these rights are generally paid as a royalty on our net sales of the item. Licenses for the use of characters may be exclusive for specific products or product lines in specified territories, or may be non-exclusive, in which case our product offerings may be competing with the product offerings of other licensees. In many instances, advance royalties and minimum guarantees are required by these license agreements. Our royalty expense in any given year may vary depending upon product mix and the timing of movie releases and other entertainment media.
We are increasingly promoting our brands through the out-licensing of our intellectual properties to third parties for a wide range of digital games, consumer products and location-based experiences. Under these agreements, licensees generally pay us a sales-based royalty, usage-based royalty, or a combination of both for use of our brands and, in some cases, the license arrangements are subject to minimum guaranteed amounts or fixed fees, over the term of the license.
Our entertainment offerings also require us to pay royalties and participations to those involved in the creation of our content, such as producers, writers, directors and actors.
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Marketing and Sales, Customer Concentration and Advertising
Marketing and Sales
Our global marketing function establishes brand direction and messaging and assists the selling entities in establishing local marketing programs. Our global marketing group works with the global development function to deliver unified, brand-specific consumer experiences. In addition to the global marketing function, our local selling entities employ sales and marketing functions responsible for local market activities and execution.
Our products are sold globally to a broad spectrum of customers, including mass-market retailers, distributors, wholesalers, discount stores, specialty hobby stores, drug stores, mail order houses, catalog stores, department stores and other traditional retailers, large and small, as well as ecommerce retailers and direct-to-customer through our fan-focused Hasbro Direct business. Our own sales forces account for the majority of sales of our products with remaining sales generated by independent distributors who, for the most part, sell our products in areas of the world where we do not otherwise maintain a direct presence. The majority of our product sales are to large chain stores, distributors, e-retailers and wholesalers.
Customer Concentration
In 2025, net revenues from our top five customers accounted for approximately 35% of our consolidated global net revenues. Our largest customers, Amazon.com, Inc. and Wal-Mart, Inc. together represented 20% of consolidated global net revenues, with each accounting for 11% and 9%, respectively. Refer to Part I, Item 1A. Risk Factors, of this Form 10-K for a further discussion of risks relating to customer concentration.
Advertising
We advertise many of our products and brands through digital marketing, social media and television. Products are strategically cross-promoted by spotlighting specific products alongside related offerings in a manner that promotes the sale of not only the selected item, but also those complementary products.
Part of our strategy includes focusing on reinforcing storylines associated with our brands through several mediums, including digital and tabletop gaming, consumer products, television, film and live action experiences. Our brands obtain marketing and advertising support through entertainment appearing on major networks globally and theatrical releases, as well as on various other digital platforms, including the use of influencers and social media.
Many of our new products are introduced to major customers within one to two years prior to their year of retail introduction. Our advertising expenditures are impacted by our product mix in any given year. For example, brands based on major motion picture releases generally require less advertising as a result of the promotional activities around the motion picture release, whereas leading into a major digital gaming launch, our Wizards of the Coast business will have substantial increases to advertising, marketing and promotional expenses to acquire players and promote gaming releases.
Supply Chain and Manufacturing
We are committed to transforming our supply chain into an industry-leading organization that delivers competitive advantages from design to shelf through superior service, responsiveness, and operational excellence. Our multi-year plan is focused on strengthening capabilities and maintaining a robust productivity pipeline to fuel Hasbro’s growth.
Key areas of focus include optimizing our manufacturing and logistics network, advancing integrated planning, and embedding design to value, and design for manufacture principles. Through these strategic pillars, our supply chain continues to create value and reduce costs across transportation, warehousing, and ex-factory expenses, while sustaining progress to continue to lower inventory levels and improving operating cash flow.
As part of the transformation, we continue to pursue a resilient sourcing strategy by diversifying our manufacturing footprint. The majority of our products are manufactured by third-party manufacturers located in China, Vietnam, India, Japan, Belgium, the United States, Mexico, and Indonesia. Most manufacturing utilizes basic raw materials such as plastic, paper and cardboard, though certain products also incorporate electronic components. Product costs are generally based on annual pricing agreements with manufacturing partners throughout the year, reflect estimated market conditions, and typically remain fixed unless significant market changes occur.
Our logistics network is designed to ensure product availability across diverse retail, digital, and direct-to-consumer channels, while maintaining operational flexibility and cost efficiency. It includes owned and leased distribution centers as well as third party logistics providers worldwide. We manage inbound and outbound transportation, order fulfillment, and network optimization to ensure delivery to retail partners and consumers.
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Continued enhancements in supply planning and forecasting are designed to improve responsiveness from manufacturing through delivery while reducing working capital requirements. Initiatives in inventory optimization, process simplification, and end-to-end system integration contribute to greaterefficiency and profitability.
In parallel, our design to value and design for manufacture initiatives focus respectively on maximizing customer value and optimizing design for efficient production. Together, these drive cost efficiency and a continuous productivity pipeline aligned with long-term growth priorities.
We remain vigilant in monitoring regulatory requirements and potential supply chain disruptions, including trade restrictions, tariff impacts, labor constraints, environmental impacts, and geopolitical developments. Working closely with our partners, we uphold high standards of product quality, safety, and ethical manufacturing, and ensure compliance with applicable trade and labor regulations.
Competition
We are a worldwide leader in the development, design, sale and marketing of games and toys, operating in a highly competitive business environment. We believe our diversified portfolio together with the strength of our extensive intellectual property portfolio provides us with a competitive advantage and allows us to adapt to changes in the competitive landscape, consumer trends and economic conditions.
The play industry is highly competitive. We view our primary competition as coming from game and toy companies, digital gaming companies and digital gaming developers. We compete with several large companies in our product categories, as well as with many smaller United States and international game and toy designers, manufacturers and marketers. In certain instances, we also compete with large retailers, who offer such products under their own private labels, often at lower prices. Competition is based primarily on meeting consumer preferences and on the quality and play value of our products and experiences. To a lesser extent, competition is also based on product pricing. We expect that as artificial intelligence becomes more prevalent, we will see increased competition from those using such technology to develop games, toys and content.
We also contend with the expanding variety of digital gaming and digital entertainment offerings available for children, while product life cycles of traditional toys and games have shortened. As a result, our products not only compete with those offerings produced by other toy and game manufacturers and companies offering branded family play and entertainment, we also compete, particularly in meeting the demands of older children and adults, with entertainment offerings of many technology companies, such as makers of tablets, mobile devices, video games and other digital gaming products and screens, and social media companies.
Seasonality
Our Wizards and entertainment businesses are subject to variations in sales based on the timing of release of card sets, games, and content releases. Release dates are determined by several factors, including the timing of holiday periods, geographical release dates and competition in the market.
For our Consumer Products segment, our customer order patterns may vary from year to year largely due to fluctuations in the degree of consumer acceptance of product lines, supply and product availability, marketing strategies and inventory policies of retailers, TV and film content releases, including the dates of theatrical releases of major motion pictures for which we offer products, and changes in overall economic conditions. As a result, a disproportionate volume of our net revenues from our consumer products business has historically been earned during the third and fourth quarters leading up to the retail industry’s holiday selling season, including Christmas.
In 2025 and 2024, the second half of the year accounted for approximately 60% and 58% of full year revenues, respectively, with the third and fourth quarters accounting for approximately 30% and 30%, respectively, of full year net revenues in 2025 and 31% and 27%, respectively, of full year revenues in each of the third and fourth quarters of 2024.
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Environmental, Social and Governance
The following discusses our governance and focus areas of our Environmental, Social and Governance (ESG) efforts.
Governance
ESG governance starts with our Board of Directors ("Board"), with specific oversight by our Nominating, Governance and Social Responsibility Committee of the Board ("Governance Committee"). ESG topics, such as climate and sustainability, human rights and ethical sourcing are regular agenda items at Governance Committee meetings. The Governance Committee analyzes these issues and makes recommendations to the full Board. In addition, the Audit Committee of our Board oversees SEC and public disclosures in specific matters, such as conflict minerals, and enterprise risk. The full Board receives regular updates regarding our ESG progress.
In addition to Board-level governance, our CEO and the Executive Leadership Team ("ELT") regularly review our ESG performance, progress and opportunities. Our ELT and members of our global corporate sustainability team meet several times a year to ensure management oversight of the Company’s ESG strategy, impact and performance. This group sets the direction for our global ESG strategy and ensures the integration of ESG throughout the organization and supply chain.
Focus Area: Climate and Sustainability
We recognize the impact our business can have on the environment and are working to reduce our footprint. We view sustainability challenges as opportunities to innovate and to continuously improve our product design and operational efficiencies.
We continue to work to integrate climate risk identification and mitigation into our overall enterprise risk management process and business. As part of this effort, we published a Climate and Nature Transition Plan and an IFRS S2 disclosure, where we describe how climate change could impact our business and the key actions we are taking that are designed to strengthen our resiliency. These disclosures contribute to our ongoing preparation work for the European Union's Corporate Sustainability Reporting Directive ("CSRD").
Focus Area: Human Rights and Ethical Sourcing
Our Human Rights and Ethical Sourcing program launched over 30 years ago and is dedicated to ensuring that facilities involved in the production of our toys, games and licensed consumer products comply with Hasbro’s Global Business Ethics Principles. The program is designed to ensure fair and safe working conditions; fairness, dignity and respect for workers; and robust supplier engagement to ensure strong safety, health and environmental performance. While working on these issues with partners, suppliers, third-party factories and licensees is complex, we remain vigilant in our commitment to ensure workers in our supply chain are treated in accordance with our high ethical standards and applicable laws.
Human Capital Management
Overview
Our key human capital management objectives for our direct workforce are to attract, develop, motivate and retain a talented workforce to enable us to offer great play experiences to our fans and consumers. The experience and dedication of our employees are at the heart of our success, energizing everything we do, from developing innovative products to creating immersive game, consumer products and entertainment experiences. Our teams are inspired by our purpose of creating joy and community for all people around the world. Our culture sets us up to deliver excellence, build impactful brands and expand our leadership in play, entertainment and beyond. As our organization continues to evolve, we remain steadfast in our ambition to provide a community where everyone can show up authentically as themselves and deliver their best work. The following discusses our governance of human capital management and our key focus areas.
Governance
Our governance of human capital management falls within the governance structure for ESG overall. The Governance Committee of the Board oversees the Company’s human capital policies and practices. The Compensation and Talent Committee of the Board oversees our compensation programs as well as talent management, including with respect to recruitment, leadership, career development, succession planning, employee engagement, Company culture and retention.
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Our Chief People Officer, who reports to the CEO and is a member of our ELT, is responsible for developing and executing key aspects of our human capital strategy, including the attraction, acquisition, development and engagement of talent to deliver on the Company’s strategy, the design of competitive compensation and employee benefit programs. Our ESG Committee is responsible for developing and executing our global ESG strategy, including our human rights and ethical sourcing programs for the workers across our supply and value chain.
Employees
In 2025, we employed approximately 4,520 people worldwide, with approximately 58% of our employees in North America (51% in the United States; 7% in Canada), 19% in Europe, 18% in Asia Pacific, and 5% in Latin America (includes Mexico). Approximately 2% of our employees globally are covered by unions or collective bargaining agreements.
Focus Area: Inclusion and Belonging
We believe that the more inclusive we are as a company, the more effective our employees will be and the stronger our business will perform. We work diligently to foster an inclusive culture that reflects the consumers and communities we serve globally.
Focus Area: Compensation & Well-being of Employees
Employee attraction, development, motivation and retention has long been a key Hasbro priority. We recognize and reward our employees with a total rewards package that includes competitive compensation and comprehensive benefits.
Our compensation program includes base pay, equity compensation (for certain levels), annual incentives, and a robust recognition program. Competitive compensation is the cornerstone of our total rewards program. We regularly review salary ratios for men and women in similar roles to help maintain internal equity and market competitiveness across the globe. We review both industry and local market data at least annually to identify trends and market gaps to maintain the competitiveness of our compensation program. When designing our compensation and employee benefit programs, we consider the big picture of how these programs contribute to the overall employee experience.
Our comprehensive benefit program includes robust core benefits, voluntary benefits, product discounts and a well-being program that help people integrate work and life commitments. We evaluate the benefit program annually to ensure our offer continues to meet the needs of our employees, remains competitive in the marketplace and continues to reflect the company values.
Focus Area: Talent Development and Performance Management
We are committed to the continued development of our people. Strategic talent assessments and succession planning occur on a planned cadence biannually – globally and across all business areas. The CEO and Chief People Officer convene meetings with senior company leadership and the Board to review the full talent pipeline with a focus on our top company talent. We provide opportunities for our employees to grow their careers through annual goal setting, development plans and quarterly conversations. We invest in developing our employees by providing blended learning opportunities and in-house trainings and by offering third-party programs, including specialized trainings and broader academic pursuits.
Focus Area: Philanthropy and Social Impact
Giving back to our local and global communities is core to our heritage and our culture. We support our team members in giving back through our volunteer program which grants employees four hours paid time off per month to volunteer. In addition, throughout the year, our Philanthropy and Social Impact team organizes team-building and skills-based volunteer projects, which provide our employees with the opportunity to make a meaningful difference in their communities around the world.
Trademarks, Copyrights and Patents
We seek to protect our products, for the most part, and in as many countries as practical, through registered trademarks, copyrights and patents to the extent that such protection is available, cost effective, and meaningful. The loss of such rights concerning any particular product is unlikely to result in significant harm to our business.
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Government Regulation
Our toy and game products sold in the United States are subject to the provisions of The Consumer Product Safety Act, as amended by the Consumer Product Safety Improvement Act of 2008 (as amended, the “CPSIA”), The Federal Hazardous Substances Act (the “FHSA”), The Flammable Fabrics Act (the “FFA”), and the regulations promulgated thereunder. In addition, a few of our products, are also subject to regulation by the Food and Drug Administration.
The CPSIA empowers the Consumer Product Safety Commission (the “CPSC”) to take action againsthazards presented by consumer products, including the formulation and implementation of regulations and uniform safety standards. The CPSC has the authority to seek to declare a product “a banned hazardous substance” under the CPSIA and to ban it from commerce. The CPSC can file an action to seize and condemn an “imminently hazardous consumer product” under the CPSIA and may also order equitable remedies such as recall, replacement, repair or refund for the product. The FHSA provides for the repurchase by the manufacturer of articles that are banned.
Consumer product safety laws also exist in some states and cities within the United States and in many international markets including Canada, Australia, Asia and Europe. We utilize independent third-party laboratories that employ testing and other procedures intended to maintain compliance with the CPSIA, the FHSA, the FFA, other applicable domestic and international product standards, and our own standards. Any material product recall or other safety issue impacting our products could have an adverse effect on our results of operations or financial condition, depending on the product and scope of the recall, could damage our reputation and could negatively affect sales of our other products as well.
The Children’s Television Act of 1990 and the rules and regulations of the United States Federal Communications Commission, the rules and regulations of the Federal Trade Commission, as well as the laws of certain other countries, also place limitations on television commercials during children’s programming and on advertising in other forms to children, and on the collection of information from children, such as restrictions on collecting information from children under the age of thirteen subject to the provisions of the Children’s Online Privacy Protection Act ("COPPA"). Legislative changes to COPPA are currently under consideration by the U.S. Congress. Digital games that are accessible to children or families may be subject to additional laws and regulations governing online safety, age-appropriate design, parental controls, advertising practices and user interaction.
In addition to laws restricting the collection of information from children, our business is subject to other regulations, such as the General Data Protection Regulation in the European Union, which restricts the collection, use, and retention of personal information, as well as data protection laws in the United States and other countries. Failure to comply with any of those restrictions can subject us to severe liabilities. We continue to monitor the developments of regulation in the area of artificial intelligence as applicable to our business as this area continues to evolve and remains uncertain.
Our digital games are subject to consumer protection and unfair or deceptive practices laws, including regulations governing digital content, in-game purchases and disclosures.
Further, we maintain programs to comply with various United States federal, state, local and international requirements relating to the environment, health, safety and other matters.
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Our Executive Officers
The following persons are our executive officers. Such executive officers are elected annually. The positions and offices listed below are the principal positions and offices held by such persons within the Company. The persons listed below generally also serve as officers and directors of certain of our various subsidiaries at our request.
Name
Age
Position and Office Held
Period
Serving in
Current
Position
Chris Cocks (1)
Chief Executive Officer
Since 2022
Gina Goetter (2)
Chief Financial Officer and Chief Operating Officer
Since 2023
Jason Bunge (3)
Chief Marketing Officer
Since 2023
Holly Barbacovi (4)
Chief People Officer
Since 2024
Tim Kilpin (5)
President, Toys, Board Games, Licensing and Entertainment
Since 2023
John Hight (6)
President, Wizards of the Coast and Digital Gaming
Since 2024
Tarrant Sibley (7)
Chief Legal Officer and Corporate Secretary
Since 2019
(1) Prior thereto, President and Chief Operating Officer of Wizards of the Coast and Digital Gaming from 2021, and President of Wizards of the Coast from 2016 to 2021.
(2) Prior thereto, Ms. Goetter served as Chief Financial Officer at Harley-Davidson, Inc. from 2020 to 2023. Prior to her time at Harley-Davidson Inc., Ms. Goetter served in senior leadership roles at Tyson Foods, Inc. from 2019 to 2020 and General Mills, Inc. from 1998 to 2019.
(3) Prior thereto, Mr. Bunge served as Chief Marketing Officer at Riot Games, where he oversaw global game marketing, product publishing, and channel strategy. Prior to his time at Riot Games, Mr. Bunge served as Senior Vice President of Brand Management and Marketing at Electronic Arts (EA).
(4) Prior to joining Hasbro in 2024, Ms. Barbacovi served as Chief People Officer at Bungie from 2021 to 2024. Prior to that she served head of human resources for Amazon Games from 2020 to 2021 and as Vice President of Human Resources at Wizards of the Coast from 2016 to 2020, and in different HR and Operations roles during a 16-year career at Microsoft.
(5) Prior to joining Hasbro in 2023, Mr. Kilpin served as Executive Chairman and Chief Executive Officer of PlayMonster Group, LLC from 2020 to 2023. Prior thereto, Mr. Kilpin held senior leadership positions within the toy and entertainment industry at companies that include Activision Blizzard, Inc., Mattel, Inc. and The Walt Disney Company.
(6) Prior to joining Hasbro in 2024, during a twelve-year tenure, Mr. Hight served as Senior Vice President and General Manager of the Warcraft franchise at Blizzard Entertainment, overseeing all development and commercial activities for World of Warcraft, Hearthstone and Warcraft Rumble. Prior to that, Mr. Hight oversaw development of God of War 3 and the PlayStation Network for Sony’s Santa Monica Studio. He also taught courses in game development for the Interactive Media Division of the USC School of Cinematics.
(7) Prior thereto, Senior Vice President, Chief Legal Officer and Secretary from 2018 to 2019 and Senior Vice President and Deputy General Counsel from 2010 to 2018.
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Availability of Information
Our internet address is http://www.hasbro.com. We make our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, available free of charge on or through the investor section of our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Investors and others should note that we announce material financial information to our investors using our investor relations website at https://hasbro.gcs-web.com, under “Corporate — Investors”, SEC filings, press releases, public conference calls and webcasts. We use these channels as well as social media to communicate with our shareholders and the public about our Company, our products and other matters. It is possible that the information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in our Company to review the information we post on the social media channels listed on our investor relations website. Hasbro has used, and intends to continue to use, our investor relations website, as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation Fair Disclosure. Further corporate governance information, including our articles of incorporation, bylaws, governance guidelines, committee charters, and code of business conduct and ethics, is also available on our investor relations website https://hasbro.gcs-web.com, under “Corporate — Investors — Corporate Governance.” The contents of our website are not intended to be incorporated by reference into this Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.
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Item 1A. Risk Factors .
In evaluating our business, the material risks described below, as well as other information contained in this Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission should be considered carefully. Additional risks not presently known to us or that we currently deem immaterial may also adversely affect our business. The occurrence of any of these events or circumstances could individually or in the aggregate have a material adverse effect on our business, financial condition, cash flow or results of operations. This report contains forward-looking statements. Please refer to the cautionary statements made under the heading "Special Note Regarding Forward-Looking Statements" for more information on the qualifications and limitations on forward-looking statements.
Strategic Risks Related to Our Business
Our business will suffer if we are not successful in executing our business strategy.
Our Playing to Win business strategy evolves around our mission to create joy and community through the magic of play and inspiring a lifetime of play. We are focused on extending the reach of our products globally to improve our position in the marketplace, increase revenue and increase operating profit.
Failure to execute this strategic plan may harm our business. Our ability to successfully implement and execute these plans and initiatives is dependent on many factors, including, among other things:
• our ability to successfullyinnovate, design, develop, price, commercialize and grow a focused group of brands to global consumers;
• continuing to grow MAGIC: THE GATHERING and driving growth in DUNGEONS & DRAGONS as traditional trading card and role-playing games, as well as further expanding into digital offerings;
• successfully growing and delivering on our digital gaming business;
• successfully launching new digital studios and new digital games that gain customer acceptance;
• continuing to grow our licensing business; and
• returning our toy business to growth and increased profitability by optimizing the business, including through right-sizing our cost structure, creating efficiencies in our operations, and designing cost-effective products.
Because our strategy emphasizes growing a focused set of franchises and expanding our higher-margin games and digital businesses, including MAGIC: THE GATHERING and DUNGEONS & DRAGONS, adverse trends affecting consumer demand for, or engagement with, any of these key brands could disproportionately impact our results of operations.
In addition, the simultaneous pursuit of multiple strategic initiatives, including digital gaming development, licensing expansion, AI adoption, systems modernization and cost-saving initiatives, may strain management attention, organizational capacity and capital resources, and any failure to appropriately prioritize or allocate resources among these initiatives could adversely affect our business and result of operations.
Our business will suffer if we are unable to develop, publish and commercialize digital games.
A key component to the success of our strategy is to continue to develop, publish and commercialize digital games, including AAA/AA games, games as a service and licensed games based on our existing IP, as well as new and licensed IP. We have invested substantially in our digital gaming business. If we are unable to successfully launch and commercialize existing and new games, our business may be harmed. The digital gaming industry is highly competitive, including for talent, and costs associated with designing, developing and producing digital games and technologically advanced or sophisticated products tend to be higher than for many of our other more traditional products, with no assurance of success. As a result, we face increased risk of not achieving sales sufficient to recover our costs and we may lose money on the development and sale of these products. There is no guarantee that a given game will be successful and it is possible we may cease development on a game after significant investment. As a result, we face the risk of significant write-offs in the event a digital game’s development is discontinued prior to commercialization or is not as commercially successful as we planned.
Designing, developing and producing digital gaming and other technologically advanced or innovative products often relies on third parties and requires different competencies and follows different timelines than traditional toys and games. Delays in the design, development or production of our digital gaming products or introduction of competitive digital game products in close proximity to our introduction could have a significant impact on our success. Further, the pace of change in product offerings and consumer tastes in electronics and digital gaming areas is potentially even greater than for our other products and this pace of change is expected to accelerate as
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artificial intelligence is further incorporated into the development of games. If a digital game fails to gain consumer acceptance early in its life cycle, there are limited opportunities to gain such acceptance through secondary launches or distribution through alternative platforms. This pace of change or lack of consumer acceptance means that the window in which a digital gaming product can achieve and maintain consumer interest may be even shorter than traditional toys and games.
We may not realize the full benefit of our licenses from third parties if the licensed material has less market appeal than expected, if revenue from the licensed products is not sufficient to earn out the minimum guaranteed royalties or if licenses are not renewed.
A significant part of our strategy for our consumer products business and our Wizards and digital gaming business is to license premium and well-recognized intellectual property for the development of products. For example, we have licenses with The Walt Disney Company for the Marvel and Star Wars properties for toys and games, and for our Universes Beyond MAGIC: THE GATHERING sets we have licenses for key brands such as Final Fantasy , Spider-Man , Avatar , and Lord Of The Rings . In some cases, we may only obtain a license for certain aspects of an intellectual property or for certain territories, which means that some of our competitors may also use the same intellectual property for other categories or in different territories. Sales may be adversely affected if the licensed products do not resonate with new or existing consumers or if consumers reduce purchases due to the perception a brand is diluted given numerous options available.
If we produce a line of products based on a movie or television series or digital game, the timing of release or overall success of the movie, series or digital game has a critical impact on the level of consumer interest in the associated products we offer. In addition, competition in our industry for access to premium brand properties is intense and can lessen our ability to secure, maintain, and renew popular licenses on beneficial terms. If we are unable to realize the full benefit of an important license, or if an important license is not renewed or is otherwise terminated, our business results may be harmed.
The license agreements we enter to obtain these rights usually require us to pay minimum royalty guarantees that may be substantial, and in some cases may be greater than what we are ultimately able to recoup from actual sales, which could result in write-offs and could harm our results of operations. Acquiring or renewing licenses may require the payment of minimum guaranteed royalties that we consider to be too high to be profitable, which may result in losing licenses that we currently hold when they become available for renewal, or not pursuing certain new licenses. Additionally, as a licensee of premium-based properties, we cannot guarantee that a particular property or brand will translate into successful products, and underperformance of any such products may result in reduced revenues and operating profit for us.
Third party licensees and partners of our brands may fail to honor their obligations to us or their actions may put us at risk.
Licensing certain of our brands and intellectual property to third parties is also a significant part of our business strategy. Under these and other partner arrangements, we lose some control over how the brand or intellectual property is used, potentially leading to misuse or misrepresentation. The actions of third-party licensees and partners may put our business and reputation at risk if they do not maintain the quality of our products or otherwise do not operate in accordance with our standards. These third parties may fail to pay royalties or other agreed upon fees, which could lead to financial losses. It is also possible that these third parties could infringe on others intellectual property rights, which could result in legal issues for us. Further, disruptions in the financial markets, economic downturns, poor business decisions, or reputational harm may adversely affect these third-party licensees and may impact their ability to honor their obligations to us or we may cease our arrangements with them. Alternative arrangements may not be available to us on commercially reasonable terms or we may experience business interruptions upon a transition to an alternative partner.
As our strategy increasingly relies on third-party partners to invest in and scale experiences based on our intellectual property, reductions in partner investment, shifts in partner priorities or changes in economic conditions could limit the growth, reach or profitability of these initiatives.
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Consumer interests change quickly and acceptance of our product offerings are influenced by technological and outside factors, making it difficult to design and develop innovative products and other offerings which are and will continue to be popular with children, families, fans and audiences.
Our ability to successfully create innovative products that inspire a lifetime of play is affected by the interests of children, families, fans and audiences which evolve quickly and can change dramatically from year to year and by geography. To be successful, we must correctly anticipate the types of products, play patterns and entertainment which will capture consumers’ interests and imagination, and quickly develop and introduce innovative and value driven products and engaging entertainment which can compete successfully for consumers’ limited time, attention and spending. It is very difficult to predict consumer acceptance with certainty due to, among other things, the increasing utilization of technology at younger and younger ages, social media and digital media, the breadth of products and entertainment available to consumers, and outside factors such as influencers, critical reviews and promotions. Evolving consumer tastes and shifting interests, coupled with an ever-changing and expanding pipeline of products, technology and entertainment which compete for consumer interest and acceptance, create an environment in which some products, technology and entertainment offerings can fail to achieve consumer acceptance or can be popular during a certain period of time but then be rapidly replaced. As a result, our products and entertainment offerings can have short consumer life cycles with no guarantee of success. In addition, frequent product releases, cross-brand collaborations or expanded licensing initiatives may contribute to franchise fatigue or oversaturation, which could reduce long-term consumer engagement and diminish the value of our brands. Failure to correctly anticipate consumer interests, will harm our revenues and earnings.
Technological developments, such as developments in artificial intelligence and shifts to streaming platforms for entertainment content, continue to evolve, and these developments may affect aspects of our existing business model, including revenue streams for the use of our intellectual property and how we create our products and games. As we incorporate AI tools into aspects of our business, including product and game development, we may face increased costs, operational complexity, IP and data governance challenges, and evolving regulatory requirements, any of which could adversely affect timelines, quality, or expected returns on investment. We may loseopportunities to capitalize on changing market dynamics, technological innovations or consumer tastes if we do not adapt to such changes in a timely manner. If we fail to accurately assess and effectively respond to changes in technology and consumer behavior in the markets in which we operate, our business may be harmed. The use of artificial intelligence in product and game development may also raise intellectual property, data sourcing, ethical or regulatory issues, and disputes or restrictions in these areas could increase costs, delay development or limit the use of certain technologies.
Failure to achieve our anticipated cost-savings may impact our ability to operate efficiently and profitably.
There are no assurances that we will achieve cost savings in the amounts we anticipate or within the anticipated timeframes or at all. In addition, any cost savings that we realize may be offset, in whole or in part, by reductions in net sales or through increases in other expenses. Failure to realize the expected cost savings from these cost savings programs could have an adverse effect on our business, financial condition, and results of operations.
If we are unable to compete effectively with existing or new competitors, our revenues, market share and profitability could decline.
The play industry is highly competitive, and if we fail to compete successfully, our business may be harmed. Our primary competition comes from toy and game companies, digital gaming companies and digital gaming developers. We compete with several large companies in our product categories, as well as with many smaller United States and international game and toy designers, manufacturers and marketers. In certain instances, we compete with large retailers, who offer such products under their own private labels, often at lower prices. Competition is based primarily on meeting consumer preferences and on the quality and play value of our products and experiences, and, in some cases, the timing of release of other products and games that attract a similar consumer. To a lesser extent, competition is also based on product pricing. We expect that as the use of artificial intelligence becomes more prevalent, we will continue to see increased competition from those using such technology to develop games, toys and content.
In addition to existing competitors, the barriers to entry for new participants in the play industry are low. The use of digital media and the heightened connection between digital media and consumer interest, has further increased the ability for new participants to enter our markets, and has broadened the array of companies we compete with. For example, with the use of influencers and media outlets such as Tik Tok, new participants with a popular product idea can gain access to consumers and become a significant source of competition for our products in a very short period of time. These existing and new competitors may respond more rapidly than us to changes in consumer preferences or may design products that are more desirable than ours. Our competitors’ products may achieve
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greater market acceptance than our products and potentially reduce demand for our products, lower our revenues and lower our profitability.
We may not realize the anticipated benefits of acquisitions, dispositions or investments in joint ventures, or those benefits may be delayed or reduced in their realization.
We cannot be certain that the products and offerings of companies we may acquire, or acquire an interest in, will achieve or maintain popularity with consumers in the future or that any such acquired companies or investments will allow us to more effectively market our products, develop our competencies or grow our business. In some cases, we expect that the integration of the companies that we may acquire will create production, marketing and other operating, revenue or cost synergies which will produce greater revenue growth and profitability and, where applicable, cost savings, operating efficiencies and other advantages. However, we cannot be certain that these synergies, efficiencies and cost savings will be realized. Even if achieved, these benefits may be delayed, reduced or short-lived in their realization. In other cases, we may acquire or invest in companies that we believe have strong and creative management, in which case we may plan to operate them more autonomously rather than fully integrating them into our operations. We cannot be certain that the key talented individuals at these companies would continue to work for us after the acquisition or that they would develop popular and profitable products, entertainment or services in the future. Acquisitions of businesses and brands could also be adversely affected by changes in our business strategy or external factors, such as any decision to sell, license or otherwise dispose of certain assets. We cannot guarantee that any acquisition, disposition, license or investment we may make will be successful or beneficial, and acquisitions, dispositions, licenses and investments can consume significant amounts of management attention and other resources, which may negatively impact other aspects of our business.
Operational Risks Related to our Business
Our business may be harmed by the imposition or threat of tariffs, including reciprocal or retaliatory tariffs, in markets in which we operate which could increase our product costs and other costs of doing business, reduce or delay purchases, impact consumer spending, or lower our revenues and earnings.
The current global tariff environment remains uncertain. For products manufactured outside the U.S., tariffs increase the cost of our products. Tariffs may impact our sales and reduce our profitability. Tariffs may also impact consumer spending if products become more expensive or consumers have less discretionary income or consumer spending power. The current tariff environment, particularly the imposition or threat of tariffs on products manufactured in China for import into the U.S. as well the potential for retaliatory and reciprocal tariffs in other countries in which we do business, has in the past negatively impacted our business and may in the future negatively impact our business, sales and profitability. The threat and imposition of tariffs have resulted in the past, and may in the future result, in the elimination of some direct import orders, where customers take ownership of products near the source of supply and import the product themselves into the U.S., in favor of shifting to domestic orders, which requires us to ship the products to the U.S., and import and warehouse the products prior to delivery to the customer. This shift to domestic orders raises the cost to us, can result in delays in the time of a sale, and may result in the potential loss of some orders entirely due to the lack of timely supply or other delays. We cannot assure you that we will be able to successfully implement actions to lessen the impact of tariffs imposed on our products, including any changes to our supply chain, logistics capabilities, sales policies or pricing of our products.
An inability to develop, introduce and ship planned products, product lines and new brands in a timely and cost-effective manner could result in excess inventory, a shortage of products or otherwise damage our business.
In developing products, product lines and new brands we have anticipated dates for the associated product and brand introductions. When we state that we will introduce, or anticipate introducing, a particular product, product line or brand at a certain time in the future those expectations are based on completing the associated development, implementation, and marketing work in accordance with our currently anticipated development schedule. If we do not have in place appropriate systems and technology, or do not obtain sufficient data, analytics and insights, we may not be able to adequately predict demand for our products. If we fail to accurately forecast demand, we may experience excess inventory levels or a shortage of product to deliver to our customers. Inventory levels in excess of demand have in the past resulted in, and may in the future result in inventory write-downs or write-offs, and the sale of excess inventory at discounted prices or through less preferred distribution channels, which could harm our profit margins. If we do not operate our supply chain in an effective manner, we will not be able to manufacture, source and ship new or continuing products in a timely manner and on a cost-effective basis to meet constantly changing consumer demands. This risk is heightened by our customers’ compressed shipping schedules and the seasonality of our business.
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We are implementing new original design processes for some of our products in an effort to reduce costs and potentially enter into new or underserved markets. At the same time, we are also increasing sophistication of many of the brands and products we are designing and developing in terms of combining digital and traditional technologies, and providing greaterinnovation and product differentiation. Unforeseendelays or difficulties in the development process, significant increases in the planned cost of development, or changes in anticipated consumer demand for our products and new brands may cause the introduction date for products to be later than anticipated, may reduce or eliminate the profitability of such products, result in excess inventory, or, in some situations, may cause a product or new brand introduction to be discontinued or not introduced in certain markets.
If we are unable to navigate through global supply chain challenges, our business may be harmed.
We have periodically faced global supply chain challenges with the production and delivery of some products being delayed due to logistics, including labor, trucking and container shortages, strikes, port congestion and other shipping disruptions. We experienced increases in material costs and shortages for some of our products, due in part to higher wages being paid due to labor shortages in China and Vietnam, as well as periodic and unpredictable manufacturing shut-downs or slow-downs due to COVID-19, political instability in certain port regions and tariffs. We can provide no assurance that we will be able to take actions, such as increase prices, to offset the entirety of additional costs we have incurred, and may incur in the future to mitigate the supply chain disruption. Further, if we are unable to negotiate favorable carrier agreements, deliver products on time or otherwise satisfy demand for our products, our business may be harmed.
If we are unable to expand our direct-to-consumer relationships, our business may be harmed.
Part of our strategy is to increase our reach with our consumers through direct-to consumer relationships created through ecommerce, social media, digital games and services. If we are unable to effectively connect with consumers through these channels, our business may be harmed. Similarly, if our technology and systems used to support direct-to-consumer order processing are not effective, our ability to deliver products on time on a cost-effective basis may be adversely affected. Failure to continue to adapt our systems and supply chain and successfully fulfill ecommerce sales could harm our business.
The concentration of our customer base means that economic difficulties or changes in the purchasing or promotional policies or patterns of our major customers could have a significant impact on us.
We depend upon a relatively small customer base to sell the majority of our products. During 2025, Amazon.com, Inc. and Wal-Mart, Inc. accounted for approximately 11% and 9%, respectively, of our consolidated net revenues. Similarly, sales of certain products of our Wizards business depend in part on the success of specialty hobby stores. Due to our customer concentration and customer base, if one or more of our major customers or specialty hobby stores were to experience difficulties in fulfilling their obligations to us, cease doing business with us, significantly reduce the amount of their purchases from us, favor competitors or new entrants, increase their direct competition with us by expanding their private-label business, change their purchasing patterns, impose unexpected fees on us, alter the manner in which they promote our products or the resources they devote to promoting and selling our products, or return substantial amounts of our products, our business may be harmed.
Our customers generally do not enter into binding long-term purchase commitments with us and make all purchases by delivering purchase orders. Any customer could reduce its overall purchase of our products and reduce the number and variety of our products that it carries and the shelf space allotted for our products. In addition, increased concentration among our customers could negatively impact our ability to negotiate higher sales prices for our products and could result in lower margins than would otherwise be obtained if there were less consolidation among our customers. Furthermore, as we experienced with the bankruptcy of certain of our retailers in the past, the failure or lack of success of a significant retail customer could negatively impact our revenues and profitability.
Our substantial business, sales and manufacturing operations outside the U.S. subject us to risks associated with international operations.
We operate in numerous countries outside the U.S. Additionally, we utilize third-party manufacturers primarily located in the Far East, including China, Vietnam and India, to produce most of our products. These international operations, including operations in emerging markets, have unique consumer preferences and business climates, present additional challenges and are subject to risks that may significantly harm our sales, increase our costs or otherwise damage our business, including:
• The imposition of tariffs as described in these risk factors, trade sanctions, quotas, border adjustment taxes or other protectionist measures;
• Political instability, civil unrest and economic instability;
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• Currency conversion risks and currency fluctuations;
• Potential challenges to our transfer pricing determinations and other aspects of our cross-border transactions, which can materially increase our taxes and other costs of doing business;
• Greaterdifficulty enforcing intellectual property rights and weaker laws protecting such rights;
• Complications in complying with different laws in varying jurisdictions and in dealing with changes in governmental policies and the evolution of laws and regulations and related enforcement, as such laws and policies relate to our products and approval of entertainment;
• Difficulties understanding the retail climate, consumer trends, local customs and competitive conditions in foreign markets which may be different from the U.S.;
• Natural disasters and the greaterdifficulty and cost in recovering therefrom;
• Difficulties in moving materials and products from one country to another, including port congestion, strikes, labor shortages and other events causing transportation delays and interruptions;
• Increased investment and operational complexity to make our products compatible with systems in various countries and compliant with local laws; and
• Changes in international labor costs and other costs of doing business internationally.
Because of the importance of international sales, sourcing and manufacturing to our business, our financial condition and results of operations could be significantly harmed if any of the risks described above were to occur or if we are otherwise unsuccessful in managing our increasing global business and operating in an environment with these risks.
Our reliance on third-party manufacturers presents risks to our business.
Most of our toy and game products are manufactured by third-party manufacturers, a substantial but decreasing number of which are in China, and a significant amount of our product sourcing also coming from manufacturers in the U.S., Vietnam, India and Japan. Should changes be necessary, our external sources of manufacturing can be shifted over a significant period of time to alternative sources of supply. Working with vendors who have not historically manufactured products for us means these new vendors must successfully develop the capability to manufacture our products to the quality and safety standards we require and within the tight timeframe required by our customers. Newer and less experienced vendors are more susceptible to product quality, logistics and other issues, due in part to their less mature infrastructure or unfamiliarity with our product standards. In addition, our increased use of original design manufacturers ("ODMs") to support cost efficiency and speed to market may reduce our direct control over product design, quality, sourcing and manufacturing processes, and any failure by ODM partners to meet our design specifications, quality standards, delivery requirements or compliance obligations could adversely affect our products, brand reputation, margins and results of operations.
If we were prevented or delayed in obtaining products or components for a material portion of our product lines due to economic, political, civil, labor or other factors beyond our control, including work stoppages, slowdowns or strikes, natural disasters, adverse health conditions or pandemics, our ability to manufacture would be adversely affected and our operations may be substantially disrupted, potentially for a significant period of time. This delay could significantly reduce our revenues and profitability and harm our business while alternative sources of supply are secured.
Given that our toy and game manufacturing is conducted by third-party manufacturers, health conditions and other factors affecting social and economic activity where our manufacturers are located may affect the movement of people and products into and from those locations to our major markets, including North America and Europe. The suspension of the operations of a third-party manufacturer by government inspectors in China or another market in which we source products could result in delays to us in obtaining product and may harm sales. Further, increases in the costs of labor and other costs of doing business in markets where we manufacture, could also have a significant negative impact on our operations, revenues and earnings. Prolongeddisputes or slowdowns at west coast or other ports can negatively impact both the time and cost of transporting goods into the U.S. Natural disasters or health pandemics impacting our manufacturers had and can have a significant negative impact on our business.
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We require our third-party manufacturers to comply with our Global Business Ethics Principles, which are designed to prevent products manufactured for us from being produced under inhumane or exploitive conditions. Notwithstanding these requirements and our monitoring and testing of compliance with them, there is always a risk that one or more of our third-party manufacturers will not comply with our requirements and that we will not immediately discover such non-compliance. Any failure of our third-party manufacturers to comply with labor, consumer, product safety or other applicable requirements in manufacturing products for us could result in damage to our reputation, harm sales of our products and potentially create liability for us.
Our dependence on third-party relationships with studios, content producers and distribution channels to develop and distribute digital games and entertainment content is critical to our business.
We rely on third party relationships with studios, content producers and distribution channels to develop and distribute certain digital games and entertainment content. Our financial performance may be adversely affected by our relationships with these studios, content producers and distribution channels. Some of our digital gaming developers and content producers are affiliates of major studios that develop their own games or content. Some have their own distribution capability in the markets in which we operate, and some may decide, or be required by their respective parent companies, to use their intra‑company distribution or content production capabilities rather than contracting with us. Our business may be harmed if the studios, content producers and distribution channels with which we work stop or reduce the amount of work they do with us or otherwise demand less favorable terms to us.
If our vendors or third-party outsourcing partners fail to perform, our business may be harmed.
We have relied and expect to further rely on third-party vendor and outsourcing relationships for certain corporate, administrative and other functional areas of the business. Working with third-parties subjects us to risk, including the reduction in full control over certain activities. Any failure to perform timely or accurately or other shortcoming of one of these vendors or outsourcers, could harm our business or could damage our reputation. Transitioning some of these services to a third-party outsourcing vendor is challenging and time-consuming. Problems with transitioning these services and systems to, or operating failures with, these vendors and outsourcers may cause delays to product sales and reduce the efficiency of our operations. We may not achieve the cost-savings we expect, and we may suffer knowledge loss and require significant capital investments to remediate the problem. We cannot guarantee that our outsourcing efforts will be successful.
Our success is dependent on the efforts and dedication of our officers and other employees.
Our officers and employees are at the heart of all our efforts. It is their skill, innovation and hard work that drive our success. We compete with many other potential employers in recruiting, hiring and retaining our management team and our many other skilled officers and employees around the world. Experienced personnel and top creative talent in the markets in which we operate are in high demand and competition for their talent is intense. Further, the continuing debate and practice of remote and hybrid work creates further challenges in retaining employees as some employees desire more flexibility in their employment and the ability to work remotely or hybrid opens up more employment opportunities.
The relocation of our primary headquarters for our toys, board games, licensing and entertainment operations from Rhode Island to Boston, Massachusetts requires substantial investment and could disrupt operations. We may lose experienced personnel unwilling to relocate, and we may face challenges recruiting in Boston's competitive labor market. If we are unable to successfully manage this transition, including facility build-out, systems migration, and cultural integration, our operations and financial performance could suffer.
Certain aspects of our business, including digital game development and franchise-driven brands such as MAGIC: THE GATHERING and DUNGEONS & DRAGONS, depend on a limited number of highly skilled creative and technical personnel, and the loss of such individuals could disrupt development pipelines or adversely affect product quality and performance.
The impact of the planned move, recent reductions in workforce or failing to retain key employees can be high due to increased risk of loss of important information, key knowledge and relationships, loss of creative talent, lost productivity, hiring and training costs, all of which could result in lower efficiency, profitability or otherwise harm the business. We cannot guarantee that we will recruit, hire or retain the key personnel we need to succeed.
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Our business may be harmed if we are unable to protect our critical intellectual property rights.
Our intellectual property, including our trademarks and tradenames, copyrights, patents, and rights under our license agreements and other agreements that establish our intellectual property rights and maintain the confidentiality of our intellectual property, is of critical value. We rely on a combination of trade secret, copyright, trademark, patent and other proprietary rights laws to protect our rights to valuable intellectual property in the U.S. and around the world. From time to time, third parties have challenged, and may in the future try to challenge, our ownership of our intellectual property in the U.S. and around the world. In addition, our business is subject to the risk of third parties counterfeiting our products or infringing on our intellectual property rights, as well as the risk of unauthorized persons copying and distributing our digital or entertainment content or leaking portions of planned digital or entertainment content. We may need to resort to litigation to protect our intellectual property rights, which could result in substantial costs and diversion of resources. Similarly, third parties may claim ownership over certain aspects of our products, productions or other intellectual property. Our failure to successfully protect our intellectual property rights could significantly harm our business and competitive position.
Failure to successfully operate our information systems and implement new technology effectively could disrupt our business or reduce our sales or profitability.
We rely extensively on various information technology systems and software applications to manage many aspects of our business, including product development, management of our supply chain, sale and delivery of our products, analytics, royalty and financial reporting and various other processes and transactions. As part of our transformation efforts, we are continuing to upgrade some of our technology and systems, and we are relying on the systems of third-party outsourcers for certain critical functions. We are critically dependent on the integrity, security and consistent operations of these systems and related back-up systems. These systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, malware and other cybersecurity attacks and breaches, catastrophic events such as hurricanes, fires, floods, earthquakes, tornadoes, acts of war or terrorism and usage errors by our employees or partners. The efficient operation and successful growth of our business depends on these information systems, including our ability and the ability of our third-party outsourcers to operate them effectively and to select and implement appropriate upgrades or new technologies and systems and adequate disaster recovery systems successfully. The failure of our information systems or third-party hosted technology to perform as designed or our failure to implement and operate them effectively could disrupt our business, require significant capital investments to remediate a problem or subject us to liability.
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If our electronic data is compromised our business could be significantly harmed.
We and our third-party outsourcers and other business partners maintain significant amounts of data electronically in locations around the world and in the cloud. This data relates to all aspects of our business, including current and future products and entertainment under development, and also contains certain customer, consumer, supplier, partner and employee data. We and our partners maintain systems and processes designed to protect this data, but notwithstanding such protective measures, there is a risk of intrusion, cyber-attacks or tampering that could compromise the integrity and privacy of this data. Cyber-attacks continue to increase in their frequency, sophistication and intensity, and are becoming increasingly difficult to detect. They are often carried out by motivated, well-resourced, skilled and persistent actors, including nation states, organized crime groups, “hacktivists” and employees or contractors acting with malicious intent. Cyber-attacks could include the deployment of harmful malware and key loggers, ransomware, a denial-of-service attack, a malicious website, artificial intelligence, the use of social engineering and other means to affect the confidentiality, integrity and availability of our or third-party technology systems and data. Cyber-attacks could also include supply chain attacks, which could cause a delay in the manufacturing of our products. In addition, we provide confidential and proprietary information to our third-party outsourcers and business partners in certain cases where doing so is necessary to conduct our business. While we obtain assurances from those parties that they have systems and processes in place to protect such data, and where applicable, that they will take steps to assure the protections of such data by third parties, those outsourcers and partners may also be subject to data intrusion or otherwise compromise the protection of such data. The risk of data loss or breaches is heightened during uncertain economic times, changes in business strategy and reductions in workforce. Any compromise of the confidential data of our customers, consumers, suppliers, partners, employees or ourselves, or failure to prevent or mitigate the loss of or damage to this data through breach of our third party outsourcers and other business partners’ information technology systems could substantially disrupt our operations, harm our customers, consumers, employees and other business partners, damage our reputation, violate applicable laws and regulations, subject us to potentially significant costs and liabilities and result in a loss of business that could be material.
Global and Economic Risks Relating to our Business
Economic conditions could impact discretionary consumer spending and harm our business and financial performance.
Our financial performance is impacted by the level of discretionary consumer spending in the markets in which we operate. Recessions or even fear or anticipation of recessions, inflation, rising costs due to tariffs or potential tariffs, rising or fluctuating interest rates and mortgage rates, credit crises and other economic downturns, or disruptions in credit markets, in the U.S. and in other markets in which we operate can result in lower levels of economic activity, lower employment levels, less consumer disposable income, and lower consumer confidence. Similarly, reductions in the value of key assets held by consumers, such as their homes or stock market investments, can lower consumer confidence and consumer spending power. Any of these factors can reduce the amount which consumers spend on the purchase of our products and entertainment. This in turn can reduce our revenues and harm our financial performance and profitability.
Inflation and other adverse economic conditions in the markets in which we and our consumers, customers, employees, suppliers and manufacturers operate could negatively impact our ability to produce and ship our products, and lower our revenues, margins and profitability.
Various economic conditions in the markets in which we, our consumers, customers, employees, suppliers and manufacturers operate, could have a significant negative impact on our revenues, profitability and business. The occurrence of adverse economic conditions can result in manufacturing and other work stoppages, slowdowns and delays; shortages or delays in production or shipment of products or raw materials; delayed or reduced purchases from customers and consumers; and other factors that cause increases in costs or delay in revenues.
Inflation can cause significant increases in the costs of other products which are required by consumers, such as gasoline, home heating fuels, or groceries, may reduce household spending on the discretionary products and entertainment we offer. Weakened economic conditions, lowered employment levels or recessions in any of our major markets may also significantly reduce consumer purchases of our products and spending on entertainment. Economic conditions may also be negatively impacted by terrorist attacks, wars and other conflicts, natural disasters, increases in critical commodity prices or labor costs, tariffs, or the prospect of such events. Such a weakened economic and business climate, as well as consumer uncertainty created by such a climate, could harm our revenues and profitability.
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Our success and profitability not only depend on consumer demand for our products, but also on our ability to produce and sell those products at costs which allow for us to make a profit. Rising fuel and raw material prices, due to inflation or otherwise, for paperboard and other components such as resin used in plastics or electronic components, increased transportation and shipping costs, and increased labor costs in the markets in which our products are manufactured all may increase the costs we incur to produce and transport our products, which in turn may reduce our margins, reduce our profitability and harm our business.
Public health crises may disrupt our business.
Outbreaks of communicable infections, diseases or other adverse public health conditions, such as COVID-19, in markets in which we, our employees, consumers, customers, partners, licensees, licensors, suppliers and manufacturers operate, has had and could in the future have a significant negative impact on our business, revenues and profitability. The occurrence of these types of events can result, and in the case of COVID-19 resulted in, disruptions and damage to our business, due to, among other things:
• difficulties in shipping and distributing products due to ongoing port capacity, and labor, shipping container and truck transportation shortages, resulting in higher costs for both ocean and air freight and delays in the availability of products, which can result in delayed sales and in some cases result in lost sales;
• disruptions in supply of products, due to closures or reductions in operations at third-party manufacturing facilities across several geographies;
• adverse sales impact due to changes in consumer purchasing behavior and availability of products to consumers;
• uncertain inventory availability or difficulty in anticipating demand, which can result in too little or too much supply at a given time;
• interruptions, delays or postponements of entertainment productions and releases; and
• challenges of working remotely.
Financial Risks Relating to our Business
Our quarterly and annual operating results may fluctuate due to seasonality in our business.
Sales of our products are seasonal, with a majority of retail sales of consumers occurring during the period from September through December in anticipation of the holiday season, and sales of our card sets, games and content releases varying based on the timing of release. Seasonality can increase pressure on suppliers like us to fill orders promptly and thereby shift a significant portion of inventory risk and carrying costs to the supplier. This can also result in our losing significant revenues and earnings if our supply chain is unable to supply product to our customers when they want it. Tariffs can exacerbate this negative impact by causing retailers to shift from direct import to domestic orders, further pressuring our supply chain.
The level of inventory carried by retailers may also reduce or delay retail sales resulting in lower revenues for us. If we or our customers determine that one of our products is more popular at retail than was originally anticipated, we may not have sufficient time to produce and ship enough additional products to fully meet consumer demand. Additionally, the logistics of supplying more products within shorter time periods increases the risk that we will fail to achieve tight and compressed shipping schedules, which also may reduce our sales and harm our financial performance. The ability to accurately predict levels of inventory remains challenging in the current economic environment, and, in recent years, has resulted in write-offs of excess inventory.
This seasonal pattern of our business requires significant use of working capital, mainly to manufacture or acquire inventory during the portion of the year prior to the holiday season and requires accurate forecasting of demand for products during the holiday season in order to avoid losing potential sales of popular products or producing excess inventory of products that are less popular with consumers. Our failure to accurately predict and respond to consumer demand, resulting in under-producing popular items and/or overproducing less popular items, would reduce our total sales and harm our results of operations.
As a result of the seasonal nature of our business, we would be significantly and adversely affected, in a manner disproportionate to the impact on a company with sales spread more evenly throughout the year, by unforeseen events such as a natural disaster, a terrorist attack, economic shock or pandemic that harms the retail environment or consumer buying patterns during our key selling season, or by events such as labor or union strikes, or delays or other issues in the supply chain, particularly from the Far East, during the critical months leading up to the holiday shopping season.
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We have had and may in the future have significant impairment charges that adversely affect our net earnings.
Changes in strategy, shifting focus to certain lines of business, lower projections in an area of the business, declines in the profitability of acquired brands or businesses or our decision to reduce our focus or exit these brands or businesses, such as certain non-core entertainment assets of the business, has in the past impacted and may in the future impact our ability to recover the carrying value of the related assets and could result in an impairment charge. Similarly, declines in our profitability may impact the fair value of our reporting units, which could result in a write-down of our goodwill and consequently harm our net earnings. We have incurred, and may in the future incur, significant costs in connection with the development of video games. If we determine that capitalized costs of the game are unlikely to be recovered by product sales due to the termination of development, lack of success of the game or otherwise, we will incur an impairment, which will be charged to costs of sales in the period in which such determination is made.
Changes in foreign currency exchange rates can significantly impact our reported financial performance.
Our global operations mean we transact business in many different jurisdictions with many different currencies. As a result, if the exchange rate between the U.S. dollar and a local currency for an international market in which we have significant sales or operations changes, our financial results as reported in U.S. dollars, may be meaningfully impacted even if our business in the local currency is not significantly affected. Similarly, our expenses can be significantly impacted, in U.S. dollar terms, by exchange rates, meaning the profitability of our business in U.S. dollar terms can be negatively impacted by exchange rate movements which we do not control. Depreciation in key currencies may have a significant negative impact on our revenues and earnings as they are reported in U.S. dollars.
Our indebtedness may limit our availability of cash, cause us to divert cash to fund debt service payments or make it more difficult to take certain other actions .
We have approximately $3,281.9 million in total long-term indebtedness. The amount of our total long-term indebtedness could:
• make it more difficult and/or costly for us to pay or refinance our debts as they become due, particularly during adverse economic and industry conditions, because a decrease in revenues or increase in costs could cause cash flow from operations to be insufficient to make scheduled debt service payments;
• require a substantial portion of our available cash to be used for debt service payments, thereby reducing the availability of our cash to fund working capital, capital expenditures, development projects, acquisitions or other strategic opportunities, dividend payments, share repurchases and other general corporate purposes;
• result in downgrades in the credit ratings on our indebtedness, which could limit our ability to borrow additional funds on favorable terms or at all (including in order to refinance our other debt), increase the interest rates under our credit facilities and under any new indebtedness we may incur;
• make it more difficult for us to raise capital to fund working capital, make capital expenditures, pay dividends, pursue strategic initiatives or for other purposes;
• result in higher interest expense, which could be further increased in case of current or future borrowings subject to variable rates of interest;
• require that materially adverse terms, conditions or covenants be placed on us under our debt instruments, which could include, for example, limitations on executing additional borrowings, paying dividends, repurchasing our common stock or making investments, any of which could hinder our access to capital markets or our flexibility in the conduct of our business and make us more vulnerable to economic downturns and adverse competitive industry conditions; and
• jeopardize our ability to pay our indebtedness if our business experienced a severedownturn.
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If we were unable to obtain or service our other external financings, or if the restrictions imposed by such financing were too burdensome, our business would be harmed.
Due to the seasonal nature of our business, in order to meet our working capital needs, particularly those in the third and fourth quarters, we may rely on our commercial paper program, revolving credit facility and our other credit facilities for working capital. We cannot guarantee that we will be able to issue commercial paper on favorable terms, or at all, at any given point in time. Further, restrictive covenants under our revolving credit facility may limit our future actions as well as our financial, operating and strategic flexibility. Non-compliance with our debt covenants could result in us being unable to utilize borrowings under our revolving credit facility and other bank lines, a circumstance which potentially could occur when operating shortfalls would require supplementary borrowings to enable us to continue to fund our operations.
Not only may our individual financial performance impact our ability to access sources of external financing, but significant disruptions to credit markets in general may also harm our ability to obtain financing. In times of severe economic downturn and/or distress in the credit markets, it is possible that one or more sources of external financing may be unable or unwilling to provide funding to us. In such a situation, it may be that we would be unable to access funding under our existing credit facilities, and it might not be possible to find alternative sources of funding.
We also may choose to finance our capital needs, from time to time, through the issuance of debt securities. Our ability to issue such securities on satisfactory terms, if at all, will depend on the state of our business and financial condition, any ratings issued by major credit rating agencies, market interest rates, and the overall condition of the financial and credit markets at the time of the offering. The condition of the credit markets and prevailing interest rates have fluctuated significantly in the past and are likely to fluctuate in the future. Variations in these factors could make it difficult for us to sell debt securities or require us to offer higher interest rates in order to sell new debt securities. The failure to receive financing on desirable terms, or at all, could damage our ability to support our future operations or capital needs or engage in other business activities.
If we are unable to generate sufficient available cash flow to service our outstanding debt we would need to refinance our outstanding debt or face default. We cannot guarantee that we would be able to refinance debt on favorable terms, or at all.
Changes in, or differing interpretations of, income tax laws and rules, and changes in our geographic operating results, may impact our effective tax rate.
We are subject to income taxes in the U.S. and in various international tax jurisdictions. We also conduct business activities between our operating units in various jurisdictions and we are subject to transfer pricing rules in the countries in which we operate. There is some degree of uncertainty and subjectivity in complying with transfer pricing rules. Our effective tax rate could be impacted by changes in, or the interpretation of, tax laws, such as those imposed by the current U.S. administration and other jurisdictions in which we do business, or by changes in the amount of revenue and earnings we derive, or are determined to derive by tax authorities, from jurisdictions with differing tax rates.
In addition, we may be subject to tax examinations by federal, state, and international jurisdictions, and these examinations can result in significant tax findings if the tax authorities interpret the application of laws and rules differently than we do or disagree with the intercompany rates we are applying. We assess the likelihood of outcomes resulting from tax uncertainties. While we believe our estimates are reasonable, the ultimate outcome of these uncertain tax benefits, or results of possible current or future tax examinations, may differ from our estimates and may have a significant adverse impact on our business and operating results.
Governmental and Legal Risks Relating to our Business
We are subject to various government regulations, violation of which could subject us to sanctions or otherwise harm our business. In addition, we could be the subject of future product liability suits or product recalls, which could harm our business.
We are subject to significant government regulations, including, in the U.S., under The Consumer Products Safety Act, The Federal Hazardous Substances Act, and The Flammable Fabrics Act, as well as under product safety and consumer protection statutes in our international markets. In addition, certain of our products are subject to regulation by the Food and Drug Administration or similar international authorities. Advertising to children is subject to regulation by the Federal Trade Commission, the Federal Communications Commission and a host of other agencies globally, and the collection of information from children is subject to the provisions of the Children’s Online Privacy Protection Act and other privacy laws around the world. In addition, our digital games and online services are subject to evolving laws and regulations relating to online safety (including protections for minors), digital
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content and in-game purchases, advertising and consumer disclosures, and the use of player data, and increased regulatory scrutiny in these areas could increase compliance costs, restrict certain features or monetization practices, or subject us to investigations, enforcement actions, fines or litigation. The collection of personally identifiable information from anyone, including adults, is under increasing regulation in many markets, such as the General Data Protection Regulation adopted by the European Union, and data protection laws in the United States and in a number of other counties. While we take all the steps we believe are necessary to comply with these acts and regulations, we cannot assure you that we will be in compliance and, if we fail to comply with these requirements or other regulations enacted in the future, we could be subject to fines, liabilities or sanctions which could have a significant negative impact on our business, financial condition and results of operations. We may also be subject to involuntary product recalls or may voluntarily conduct a product recall. While costs associated with product recalls have generally not been material to our business, the costs associated with future product recalls individually or in the aggregate in any given fiscal year could be significant. In addition, any product recall, regardless of direct costs of the recall, may harm the reputation of our products and have a negative impact on our future revenues and results of operations.
As a large multinational corporation, we are subject to a host of governmental regulations throughout the world, including antitrust, employment, pay transparency, customs and tax requirements, anti-boycott regulations, environmental regulations and the Foreign Corrupt Practices Act. There are also many new laws and proposed laws, rules and regulations governing the use of artificial intelligence that may become applicable to our business. Complying with these regulations imposes costs on us which can reduce our profitability and our failure to successfully comply with any such legal requirements could subject us to monetary liabilities and other sanctions that could further harm our business and financial condition.
We are involved in litigation, arbitration or regulatory matters where the outcome is uncertain and which could entail significant expense.
As a large multinational corporation, we are subject to regulatory investigations, litigation and arbitration disputes, including potential liability from personal injury or property damageclaims by the users of products that have been or may be developed by us, claims by third parties that our products infringe upon or misuse such third parties’ property or rights, securities claims, royalties claims, pay transparencyclaims, claims by former employees for employment related matters and claims relating to media content. Because the outcome of litigation, arbitration and regulatory investigations is inherently difficult to predict, it is possible that the outcome of any of these matters could entail significant cost for us and harm our business. The fact that we operate in a significant number of international markets also increases the risk that we may face legal and regulatory exposures as we attempt to comply with a large number of varying legal and regulatory requirements. Any successful claim against us could significantly harm our business, financial condition and results of operations.
Hasbro Inc. ("Hasbro") is a leading games, intellectual property ("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 to kids, families, and fans 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 PULSE, 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 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.
Recent Developments
Tariffs
Significant changes in trade policy announced by the U.S. government could adversely impact our forward-looking financial results. The Company monitors the impacts of tariffs to its business operations on an ongoing basis and may need to implement actions such as price adjustments or making changes in our supply chain sourcing strategies in order to mitigate the impact of tariffs in future periods. The impacts of tariffs may lead to reduced economic activity, increased costs, reduced demand and changes in purchasing behaviors for some or all of our products, actual or potential impairments, write-downs or unrealizability of some of our existing assets, or other economic outcomes that could have a material adverse impact on our sales volumes, prices, and our financial results.
As a result of the estimated impact of tariffs and other macroeconomic headwinds on the Company's forward-looking forecasts, in the second quarter of 2025, the Company assessed its goodwill for potential impairment, resulting in the recognition of a non-cash goodwill impairment of $1,021.9 million in the Consumer Products segment. Refer to Note 8, Goodwill and Intangible Assets, in our notes to consolidated financial statements for further details related to goodwill.
The Company recognized approximately $44.9 million of tariff costs within Cost of sales during 2025. While the final impacts of tariffs remain uncertain, the Company continues to execute decisively against the evolving tariff backdrop.
On February 20, 2026, the U.S. Supreme Court issued a ruling against the International Emergency Economic Powers Act ("IEEPA") Tariffs that we have been paying to the U.S. government since the enactment on April 2, 2025. This could impact our results in 2026 and we are currently evaluating the accounting impacts including our ability to apply for a refund on tariffs previously paid.
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Summary of Financial Performance
Results of Operations — Consolidated
The following table presents the consolidated results of operations for 2025 and 2024:
Amount
% Net Revenues
Amount
% Net Revenues
Net revenues
Costs and expenses
Cost of sales
Program cost amortization
Royalties
Product development
Advertising
Amortization of intangible assets
Impairment of goodwill
Loss on disposal of business
Selling, distribution and administration
Total costs and expenses
Operating profit
Non-operating expense
Interest expense
Interest income
Other (income) expense, net
Total non-operating expense, net
(Loss) earnings before income taxes
Income tax expense
Net (loss) earnings
Net earnings attributable to noncontrolling interests
Net (loss) earnings attributable to Hasbro, Inc.
Net (loss) earnings per common share:
Basic
Diluted
Net Revenues
Consolidated net revenues for the year ended December 28, 2025 increased 13.7% to $4,701.3 million from $4,135.5 million for the year ended December 29, 2024, primarily driven by growth of $675.6 million, or 44.7%, in the Wizards of the Coast and Digital Gaming segment. This growth was offset by a $106.3 million, or 4.2%, decrease in the Consumer Products segment, as well as a $3.5 million, or 4.4%, decrease in the Entertainment segment. Refer to the Segment Results discussion below for further details.
The following table presents net revenues expressed by brand portfolio category for 2025 and 2024:
% Change
Grow Brands
Optimize Brands
Reinvent Brands
Net Revenues
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Grow Brands: Our Grow Brands represent the highest margin, highest growth opportunities in categories where we see significant share and/or underlying market growth, such as MAGIC: THE GATHERING, Hasbro Gaming, PLAY-DOH, Marvel, including SPIDER-MAN and THE AVENGERS, and DUNGEONS & DRAGONS. The Grow Brands portfolio net revenues increased 24.4% in 2025 as compared to 2024. The net revenue increase primarily reflects higher net revenues from MAGIC: THE GATHERING, which had a record year, increasing $641.5 million from 2024 behind Universes Beyond sets such as Final Fantasy , Avatar: The Last Airbender, Marvel's Spider-Man , and Edges of Eternities. Growth in MAGIC: THE GATHERING was accompanied by an increase in MONOPOLY, both in the traditional games space, as well as from increased contributions from our digital licensing arrangement with Scopely, Inc. for MONOPOLY GO!, which contributed $168.0 million of revenue in 2025 compared to $112.2 million of revenue in 2024. The net revenue increase was partially offset by revenue declines from PLAY-DOH and DUNGEONS & DRAGONS.
Optimize Brands: Optimize Brands represent opportunities to maintain or grow share while improving operating profit returns, including brands such as TRANSFORMERS, PEPPA PIG, and Lucasfilms' STAR WARS. The Optimize Brands portfolio net revenues decreased 4.6% in 2025 as compared to 2024. During 2025, Optimize Brands net revenue decreases were driven by lower net revenues from the Company's products for STAR WARS, impacted by a reduced slate of entertainment releases, along with declines from PEPPA PIG and BABY ALIVE. The net revenue decrease was partially offset by continued growth in TRANSFORMERS and DUEL MASTERS.
Reinvent Brands: Reinvent Brands represent opportunities to reinvent or restructure to drive innovation and improve operating profit returns and include those brands such as NERF, BEYBLADE, PJ MASKS, POWER RANGERS, and FURBY. The Reinvent Brands net revenues decreased 13.7% in 2025 as compared to 2024 primarily driven by lower net revenues from NERF, which were partially offset by revenue contributions from BEYBLADE. In addition, Reinvent Brands net revenues were also negatively impacted by the lapping of prior year's licensing revenues for MY LITTLE PONY trading cards, which directly resulted in a decrease of $40.5 million, or 47.0%, year-over-year.
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 increased 9.9% to $1,296.2 million, or 27.6% of net revenues, for 2025 compared to $1,179.5 million, or 28.5% of net revenues, for 2024. The Cost of sales increase in dollars was driven primarily by sales volumes and a $26.7 million benefit recorded during 2024 related to a historical over-accrual of vendor commitment liabilities as discussed in Note 1, Summary of Significant Accounting Policies, in our notes to consolidated financial statements. Additionally, Cost of sales for 2025 includes $44.9 million of tariff costs. These factors were offset by supply chain productivity and cost savings initiatives.
Program Cost Amortization: Program cost amortization totaled $35.8 million, or 0.8% of net revenues in 2025, compared to $49.3 million, or 1.2% of net revenues in 2024. The majority of the Company's program costs are capitalized as incurred and amortized using the individual-film-forecast method. 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 2025 was driven by reduced content spend.
Royalties: Royalties totaled $368.9 million, or 7.8% of net revenues, in 2025 compared to $284.2 million, or 6.9% of net revenues, in 2024. 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, as well as product mix for our toy, game, and trading card products that utilize partner IP. The increase in Royalties in dollars and as a percent of net revenues during 2025 directly reflects the impact of increased sales relating to MAGIC: THE GATHERING Universes Beyond sets, such as Final Fantasy, Avatar: The Last Airbender and Marvel's Spider-Man , for which the Company is obligated to pay a royalty.
Product Development: Product development expense in 2025 totaled $385.6 million, or 8.2% of net revenues, compared to $294.1 million, or 7.1% of net revenues, in 2024. Product development expenditures reflect the Company’s investment in innovation and anticipated growth across our brand portfolio. The increase in Product development expense during 2025 was driven by incremental investments in the development of digital game titles that have not yet met technological feasibility.
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Advertising: Advertising expense in 2025 totaled $316.9 million, or 6.7% of net revenues, compared to $319.5 million or 7.7% of net revenues in 2024. The level of the Company’s advertising expense is generally impacted by revenue mix, as well as the amount and type of theatrical releases and television programming delivered. The Advertising expense decrease during 2025 was primarily driven by the Consumer Products segment, which decreased $30.3 million , as the Company sought measures to reduce variable expenses to offset the operating profit impact of tariffs. The reduction in Consumer Products spend was offset by additional spend necessary to support top line growth opportunities within the Grow Brands category, specifically an increase of $28.8 million within the Wizards of the Coast and Digital Gaming segment.
Amortization of Intangible Assets: Amortization of intangible assets remained relatively flat at $66.0 million, or 1.4% of net revenues, in 2025 compared to $68.3 million, or 1.7% of net revenues, in 2024. The amortization expense was driven by the straight-line amortization of the Company's remaining definite-lived intangible assets.
Impairment of Goodwill: During 2025, the Company recorded a $1,021.9 million non-cash goodwill impairment charge associated with goodwill assigned to reporting units within the Company's Consumer Products segment. There were no goodwill impairment charges during 2024. Refer to Note 8, Goodwill and Intangible Assets, in our notes to consolidated financial statements for further details.
Loss on Disposal of Business: Loss on disposal of business decreased to $25.0 million, or 0.5% of net revenues, in 2025 compared to $37.4 million, or 0.9% of net revenues, in 2024. The Loss on disposal of business for both periods represents the loss recognized associated with the divestiture of the Company's non-core film and TV business (the "eOne Film and TV business") within the Entertainment segment. Refer to Note 3, Sale of Entertainment One Film and TV Business, in our notes to 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 $1,173.9 million, or 25.0% of net revenues in 2025, from $1,213.2 million, or 29.3% of net revenues, in 2024. The decrease in Selling, distribution and administration expenses during 2025 compared to 2024 primarily reflects lower administrative expenses due to cost savings initiatives, along with a non-recurring $31.1 million expense related to historical environmental exposures recorded during 2024, partially offset by a non-recurring stock-compensation adjustment of $18.1 million recorded during 2024, as discussed in Note 1, Summary of Significant Accounting Policies, in our notes to consolidated financial statements.
NON-OPERATING EXPENSE
Interest Expense: Interest expense totaled $163.4 million in 2025 compared to $171.2 million in 2024. The decrease in Interest expense in 2025 primarily reflects lower average outstanding borrowings in 2025 as compared to 2024. These decreases were partially offset by a higher average interest rate on the outstanding borrowings.
Interest Income: Interest income was $28.6 million in 2025 compared to $47.3 million in 2024. Lower Interest income in 2025 primarily reflects earnings on the Company's investments in U.S. Treasury bills, which were substantially higher in 2024 when compared to 2025.
Other (income) expense, Net: Other income, net was $21.7 million in 2025 compared to other expense of $69.1 million in 2024. Other (income) expense, net in 2024 was impacted by an impairmentloss of $78.2 million related to our joint venture investment in the Discovery Family Channel as discussed in Note 9, Equity Method Investment, in our notes to consolidated financial statements. The remainder of the change in Other (income) expense, net was primarily driven by foreign currency exchange gains and losses experienced during 2025 as compared to those experienced during 2024.
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INCOME TAXES
Income tax expense totaled $216.2 million on pre-tax loss of $102.0 million during 2025 compared to income tax expense of $102.6 million on pre-tax income of $497.0 million during 2024. Both periods were impacted by discrete tax events. During 2025, the Company recorded a non-cash goodwill impairment within the Consumer Products segment of $1,021.9 million with an associated tax benefit of $5.4 million and an unfavorable adjustment to Loss on disposal of the eOne Film and TV business of $25.0 million with no associated tax benefit. For 2024, the Company had a $37.4 million unfavorable adjustment to Loss on disposal of the eOne Film and TV business with no associated tax benefit.
The effective tax rates for 2025 and 2024 were (212.1)% and 20.7%, respectively. The change in the effective rate from 2024 to 2025 is primarily driven by the non-cash impairment of goodwill with no material tax benefit.
Exclusive of the impairment of goodwill and the unfavorable adjustment to the Loss on disposal of the eOne Film and TV business, the Company recorded a net discrete tax expense of $2.3 million compared to a net discrete tax benefit of $13.1 million during 2024. The net discrete tax expense recorded in 2025 is primarily associated with net valuation allowances recorded during the year. The net discrete tax benefit recorded in 2024 is primarily associated with a benefit from the release of uncertain tax positions for certain statute of limitation expirations, and favorable return to provision adjustments.
We previously considered the earnings in our non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes. 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. However, we intend to repatriate substantially all of our accumulated foreign earnings when appropriate. As of December 28, 2025, we have recorded $5.3 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 ongoing distribution analysis is completed and is able to make reasonable estimates.
We are subject to income and other taxes in the U.S. (federal and state) and foreign jurisdictions. Changes to these laws or regulations may impact our tax liabilities. On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law with certain provisions effective in 2025 and other provisions becoming effective in 2026. The OBBBA provisions include the restoration of full expensing for domestic research and development expenses, reinstatement of accelerated depreciation on qualified capital expenditures, and modifications to the international tax framework, among other items. The OBBBA also provides for an election to accelerate the deduction of the remaining unamortized domestic research and development expenses capitalized previously. For fiscal year 2025, the primary impact of the OBBBA to the Company was the accelerated expensing of domestic research and development costs which decreased our income eligible for foreign-derived intangible income ("FDII"), reduced our deferred tax assets, and reduced our current income tax liability. Other OBBBA changes did not have a material impact on the Company's consolidated financial statements in the current year, we are assessing the impact of OBBBA on the consolidated financial statements for future periods.
As a global company, we review changes in all global tax laws. In 2025 and 2024 no changes, other than those discussed above, materially impacted our Consolidated Financial Statements.
SEGMENT RESULTS
The summary that follows provides a discussion of the results of operations of our segments: Wizards of the Coast & Digital Gaming, Consumer Products 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.
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The following table presents net external revenues and operating profit (loss) for the Company's reportable segments for 2025 and 2024:
% Change
Net revenues:
Wizards of the Coast and Digital Gaming
Consumer Products
Entertainment
Total net revenues
Operating profit (loss):
Wizards of the Coast and Digital Gaming
Consumer Products (1)
Entertainment (1)
Corporate and Other
Total operating profit
(1) % Change is not meaningful ("NM") for these segments.
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 2025 and 2024:
% Change
Tabletop Gaming
Digital and Licensed Gaming
Net Revenues
Wizards of the Coast and Digital Gaming segment net revenues increased 44.7% in 2025 compared to 2024. Tabletop Gaming revenue increased 62.2% behind growth of $638.2 million in MAGIC: THE GATHERING, primarily due to strong demand for Universes Beyond sets such as Final Fantasy, Marvel's Spider-Man, and Avatar: The Last Airbender as well as various backlist titles. Digital and Licensed Gaming increased 6.1% due to strong results for MONOPOLY GO!, which contributed $168.0 million of revenue in 2025 compared to $112.2 million of revenue in 2024.
Wizards of the Coast and Digital Gaming segment operating profit increased $374.8 million to $1,006.8 million in 2025, compared to $632.0 million in 2024. The increase in operating profit in dollars is directly attributable to the revenue growth as discussed above. Segment operating profit margin increased to 46.0% in 2025 from 41.8% in 2024, primarily driven by increased net revenue and product mix in 2025 as compared to 2024.
Consumer Products Segment
The following table presents the Consumer Products segment net revenues by major geographic region for 2025 and 2024:
% Change
North America
Europe
Asia Pacific
Latin America
Net Revenues
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Consumer Products segment net revenues decreased 4.2% in 2025 compared to 2024 primarily driven by reduced sales volumes, which was impacted by broader industry trends and tariff-related impacts to North America, partially offset by strong performance in Europe. While the Company had growth in brands such as BEYBLADE, MARVEL, MONOPOLY, and TRANSFORMERS, the growth was more than offset by lower net revenue for brands such as NERF, MY LITTLE PONY, and PLAY-DOH. The decline associated with MY LITTLE PONY was attributed to the lapping of 2024 licensing revenue related to MY LITTLE PONY trading cards, which resulted in a decrease of $40.5 million, or 47.0%, year-over-year.
Consumer Products segment operating results decreased $1,057.9 million to an operating loss of $942.6 million in 2025, compared to operating profit of $115.3 million in 2024. Operating profit margin decreased to (38.7)% of net revenues in 2025 from an operating margin of 4.5% of net revenues in 2024. The decrease in operating profit in 2025 in both dollars and percent was driven by the declines in revenue, discussed above, a non-cash goodwill impairment charge of $1,021.9 million recorded in 2025, and approximately $44.9 million of tariff costs recognized in Cost of sales. The declines were partially offset by savings realized from the Company's cost savings and transformation initiatives. Refer to Note 8, Goodwill and Intangible Assets, in our notes to consolidated financial statements for further details related to goodwill.
Entertainment Segment
The following table presents Entertainment segment net revenues by category for 2025 and 2024:
% Change
Family Brands
Film and TV
Net Revenues
Entertainment segment net revenues decreased 4.4% in 2025 compared to 2024, primarily driven by the timing of entertainment streaming renewals.
Entertainment segment operating profit increased to $0.4 million, compared to an operating loss of $1.6 million in 2024. The increase in Entertainment segment operating results was driven by a decrease of $12.4 million in Loss on disposal of business related to the sale of the eOne Film and TV business in 2025 as compared to 2024. Refer to Note 3, Sale of Entertainment One Film and TV Business, to the notes to consolidated financial statements for further details. The favorability was offset by lower segment net revenues due the timing of entertainment streaming renewals and a decrease of $16.2 million in royalty income allocated to the Entertainment segment driven by the decrease in sales volumes within the Consumer Products segment, partially offset by $13.5 million of lower program cost amortization.
Corporate and Other
In Corporate and Other, the operating losses were $53.5 million in 2025 compared to operating losses of $55.7 million in 2024. Operating losses in 2025 were lower than 2024, primarily due to net realized cost savings initiatives more than offsetting three prior period non-recurring adjustments recorded during 2024 that provided a combined income statement benefit of approximately $13.7 million. Refer to Note 1, Summary of Significant Accounting Policies, to the notes to consolidated financial statements for further details on the non-recurring adjustments.
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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.
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.
The quantitative test of goodwill for impairment requires us to estimate the fair value of our reporting units. We test goodwill at the reporting unit level, which we define as one level below the operating segment. Our reporting units are aligned with our product lines that are separately managed and reviewed. As a result of the estimated impact of tariffs and other macroeconomic headwinds on the Company's forward-looking forecasts, in the second quarter of 2025, we performed a quantitative impairment test for certain of our reporting units within the Consumer Products and Entertainment segments. The reporting units within the Consumer Products segment subject to the quantitative test included North America, Europe, Asia Pacific, and Latin America, as well as the Family Brands reporting unit within the Entertainment segment. We have concluded that the North America, Europe, Asia Pacific, and Latin America reporting units have similar economic characteristics and should be aggregated for purposes of testing goodwill for impairment. Our conclusion was based on a detailed analysis of the aggregation criteria set forth in the Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") Topic 280, Segment Reporting , and in FASB ASC Topic 350, Intangibles - Goodwill and Other . These reporting units serve similar clients and have similar products, including similar sourcing and distribution methods and they have similar economic characteristics.
We determined that the carrying values of our regional Consumer Products reporting units, when aggregated during the second quarter of 2025 based upon similar economic characteristics, exceeded their respective fair values and recorded aggregate pre-tax non-cash impairment charges of $1,021.9 million. Specifically, the fair values of North America and Europe reporting units were determined considering a discounted cash flow model which is primarily based on management’s future revenue and cost estimates, which included the estimated impact of tariff policies in effect and the related macroeconomic environment, and discount rate. The fair values of the Asia Pacific and Latin America reporting units were determined considering a discounted cash flow model weighted equally with the market approach which is primarily based on multiples of comparable public companies.
The fair value of our Family Brands reporting unit, within the Entertainment segment, exceeded the carrying value of that reporting unit by approximately 15%. As of December 28, 2025, $325.2 million of goodwill is allocated to the Family Brands reporting unit. The fair value of the Family Brands reporting unit was determined considering a discounted cash flow model weighted equally with the market approach which is primarily based on multiples of comparable public companies. Management closely monitors the operating results of all reporting units in addition to macroeconomic conditions and trade policy developments. Further volatility of trade, geopolitical tensions, or negative global economic developments could cause significant further decreases in the operating results of our reporting units, which may result in a recognition of a goodwill impairment that could be material to the consolidated financial statements in future periods.
Critical assumptions used in the determination of the reporting units’ fair value included management’s estimated future revenue growth rates, estimated future margins, and discount rate. Estimated future revenue growth and margins are based on management’s best estimate about current and future conditions. During the second quarter of 2025, the regional consumer products reporting units included discount rates ranging from 10.5% to 14.0% and a terminal value revenue growth rate of 3.0%. Additionally, the forecasted growth in operating profit margins towards the terminal value operating profit is aligned with industry averages. For the Family Brands reporting unit, critical assumptions included a discount rate approximating 9.5%, a terminal value revenue growth rate of 3.0%, and a
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terminal operating profit margin consistent with levels achieved in recent historical periods when excluding one-time impairment and disposal charges. Although we believe the assumptions and estimates made were reasonable and appropriate, these estimates are based on a number of factors including historical experience and information obtained from reporting unit management. Actual results could differ from these estimates, especially given uncertainty related to tariffs, global trade policy, and global macroeconomic conditions. We determined the discount rate using our weighted average cost of capital adjusted for risk factors specific to the reporting unit, with comparison to market and industry data.
Further, during the second quarter of 2025, we proceeded to perform sensitivities in our impairment testing of the Family Brands reporting unit by (i) increasing the discount rate 250 basis points, (ii) decreasing the expected long-term growth rate 750 basis points, (iii) decreasing the annual revenue projections 400 basis points, and (iv) decreasing projected gross margins 1,000 basis points. None of these sensitivities individually would have resulted in a conclusion that the goodwill in our Family Brands reporting unit was impaired.
The annual fiscal year 2025 assessment for impairment of goodwill, with respect to each of its reporting units, was performed using a qualitative approach to determine 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 2025 annual impairment analysis for goodwill, we concluded that it is more likely than not that the fair value of goodwill exceeded its carrying value. Refer to Note 8, Goodwill and Intangible Assets, in our notes to consolidated financial statements for more information on the Company's goodwill.
Our fiscal year 2025 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 impairmentloss is recognized in an amount equal to the excess. Based on our fiscal year 2025 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 2025, 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.
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NEW ACCOUNTING PRONOUNCEMENTS
For a discussion of recent accounting pronouncements and a discussion of the Company's significant accounting policies refer to Note 1, Summary of Significant Accounting Policies, in our notes to consolidated financial statements.
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 28, 2025, the Company had $776.6 million of Cash and cash equivalents, $105.4 million of Short-term investments and $3,281.9 million of total 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.
The impact of tariffs recognized by the Company in Cost of sales was approximately $44.9 million during 2025. Significant changes in trade policy announced by the U.S. government could adversely impact our forward-looking financial results, including the timing and extent of cash flows based upon timing in customer buying patterns and changes in our supply chain sourcing strategies.
Indebtedness and Credit Facilities
As of December 28, 2025, the Company had $3,281.9 million of debt due at varying times from 2026 through 2044. 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 28, 2025. The Company had no borrowings outstanding under its committed revolving credit facility as of December 28, 2025. However, letters of credit outstanding under this facility were approximately $3.3 million. Amounts available and unused under the committed line, as of December 28, 2025 were approximately $1.25 billion, inclusive of borrowings under the Company’s commercial paper program. On February 20, 2026, the Company amended and restated the Amended Revolving Credit Agreement which extended the maturity date through February 2031 and reduced the aggregate principal amount to $1.1 billion, with the potential for an incremental commitment increase of up to $550.0 million. The Company also has other uncommitted lines from various banks, of which approximately $8.4 million was utilized in the form of letters of credit, on December 28, 2025.
In June 2025, the Company entered into a money market line of credit agreement (the “Money Market Credit Facility”) to provide the Company with access to uncommitted, short-term cash advances with an aggregate principal amount of up to $100.0 million. The Money Market Credit Facility is intended to support the Company’s short-term liquidity needs, including working capital and general corporate purposes. As of December 28, 2025, the Company did not have any outstanding credit under the Money Market Credit Facility. Refer to Note 12, Long-Term Debt and Other Financing, to the consolidated financial statements for further information.
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
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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 $45.7 million, and $66.2 million as of December 28, 2025 and December 29, 2024, 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 2025, the Company repurchased $119.9 million in aggregate principal of its 2026 and 2027 Notes.
Refer to Note 12, Long-Term Debt and Other Financing, in our notes to consolidated financial statements for additional information on outstanding long-term debt and credit facilities.
Cash Flow
The following table presents the cash flow activities for 2025 and 2024:
Net cash provided (utilized) by:
Operating activities
Investing activities
Financing activities
Effect of exchange rate changes on cash
Increase in cash, cash equivalents and restricted cash
Operating Activities:
Cash flows provided by operating activities were $893.2 million in 2025 as compared to $847.4 million in 2024. The net earnings after adjusting for non-cash items increased to $1,213.5 million in 2025 compared to $787.9 million in 2024. The changes in operating assets and liabilities yielded a net outflow of $320.3 million compared to an inflow of $59.5 million primarily attributable to an increase in Accounts receivable in 2025 compared to a decrease in Accounts Receivable in 2024, which is primarily the result of an overall net revenue increase. The change in Accounts Receivable is coupled with a change in inventory purchases, which have increased period over period as the result of a strategic decision to build increased flexibility to better match product demand during higher seasonal periods, along with the impact of tariffs. Operating cash flow was also impacted by the timing and magnitude of tax payments, including the payment of the net deemed repatriation tax, in 2025 when compared to 2024.
Investing Activities:
Net cash flows utilized by investing activities were $284.4 million in 2025 as compared to $203.7 million in 2024. Investing activities in 2025 primarily reflects $105.4 million of purchases of U.S. Treasury bill investments, $63.3 million of additions of property, plant, and equipment, and $135.0 million of additions attributable to software development. Investing activities in 2024 primarily reflects $87.2 million of additions of property, plant, and equipment and $110.3 million of additions attributable to software development. Purchases of U.S. Treasury bills of $571.0 million in the prior year were offset by maturities of those investments in the amount of $583.0 million within the same year. Overall additions to software development increased in 2025 due to the timing of digital gaming projects.
We expect total cash capital expenditures in fiscal year 2026 to be approximately $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 $531.3 million and $497.5 million in 2025 and 2024, respectively. Financing activities in 2025 primarily include dividends paid of $392.5 million, aggregate repayments of long-term debt of $118.2 million related to the repurchase of a portion of its Notes due in 2026 and 2027, and $23.7 million of payments related to tax withholdings for stock compensation coinciding with equity award vesting activity.
Financing activities in 2024 primarily include 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, net proceeds of $498.6 million from the issuance of the 2034 Notes, dividends paid of $389.9 million, and $14.4 million of payments related to tax withholdings for stock compensation coinciding with equity award vesting activity.
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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 – Refer to Note 12, Long-Term Debt and Other Financing, in our notes to consolidated financial statements for further detail of our debt, including letters of credit, and the timing of expected future principal payments.
• Operating lease obligations – Refer to Note 18, Leases, in our notes to 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. Refer to Note 17, 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 agreements contain provisions for the payment of guaranteed or minimum royalty amounts. Refer to Note 21, Commitments and Contingencies, in our notes to 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. Refer to Note 21, Commitments and Contingencies, in our notes to consolidated financial statements for further detail of our obligations and the expected timing of expected future payments.
• Uncertain Tax Positions – As of December 28, 2025, the Company has a liability of $49.0 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. As of December 28, 2025, 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 $23.3 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.
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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 ongoing 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 derivative financial instruments at their fair value as an asset or liability on the Consolidated Balance Sheets. The Company does not speculate in foreign currency exchange contracts. As of December 28, 2025, these contracts had net unrealized losses of $7.1 million, of which $0.7 million of unrealized gains recorded in Prepaid expenses and other current assets, $0.9 million of unrealized gains are recorded in Other assets, $8.0 million of unrealized losses are recorded in Accrued liabilities, and $0.7 million of unrealized losses are recorded in Other liabilities. Included in Accumulated other comprehensive loss at December 28, 2025 are deferred losses of $8.3 million, net of tax, related to these derivative financial instruments.
As of December 28, 2025, the Company had fixed rate long-term debt of $3,281.9 million.
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 35% of its consolidated net revenues in 2025. 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 2025 approximately 60% 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 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 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.
