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Basis of Presentation | 9 Months Ended
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Sep. 29, 2019
Accounting Policies [Abstract] |
Basis of Presentation | Basis of Presentation In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the consolidated financial position of Hasbro, Inc. and all majority-owned subsidiaries ("Hasbro" or the "Company") as of September 29, 2019 and September 30, 2018, and the results of its operations and cash flows and shareholders' equity for the periods then ended in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and notes thereto. Actual results could differ from those estimates. The quarters ended September 29, 2019 and September 30, 2018 were each 13-week periods. The nine month periods ended September 29, 2019 and September 30, 2018 were each 39-week periods. The results of operations for the quarter and nine month periods ended September 29, 2019 are not necessarily indicative of results to be expected for the full year, nor were those of the comparable 2018 period representative of those actually experienced for the full year 2018. Certain reclassifications have been made to prior year amounts to conform to the current period presentation. These condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Certain information and disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The Company filed with the SEC audited consolidated financial statements for the fiscal year ended December 30, 2018 in its Annual Report on Form 10-K ("2018 Form 10-K"), which includes all such information and disclosures and, accordingly, should be read in conjunction with the financial information included herein. Recently Adopted Accounting Standards The Company's accounting policies are the same as those described in Note 1 to the Company's consolidated financial statements in its 2018 Form 10-K with the exception of the accounting policies related to leases and derivatives and hedging. In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2016-02 (ASU 2016-02), Leases (Topic 842), which requires lessees to recognize a right-of-use asset and a lease liability for virtually all leases. The liability is based on the present value of lease payments and the asset is based on the liability. For income statement purposes, a dual model was retained requiring leases to be either classified as operating or finance. Operating leases result in straight-line expense while finance leases result in a front-loaded expense pattern. Certain other quantitative and qualitative disclosures are also required. ASU 2016-02 was required for public companies for fiscal years beginning after December 15, 2018. ASU 2016-02 as originally issued required modified retrospective adoption. In July 2018, the FASB issued ASU 2018-11, which provides an alternative transition method in addition to the existing method by allowing entities to apply ASU 2016-02 as of the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted ASU-2016-02 on December 31, 2018 using the retrospective basis as provided in ASU 2018-11. No cumulative effect was recorded to retained earnings. The Company also elected certain practical expedients as provided under the standard. These included (i) the election not to reassess whether contracts existing at the adoption date contain a lease under the new definition of a lease under the standard; (ii) the election not to reassess the lease classification for existing leases as of the adoption date; (iii) the election not to reassess whether previously capitalized initial direct costs would qualify for capitalization under the standard; (iv) the election to use hindsight in determining the relevant lease terms for use in the capitalization of the lease liability; and (v) the election to use hindsight in reviewing the right-of-use assets for impairment. For all leases, the terms were evaluated, including extension and renewal options as well as the lease payments associated with the leases. As a result of the adoption of the standard, in the first quarter of 2019, the Company recorded right-of-use assets of $121,230 and lease liabilities of $139,520. The Company’s results of operations were not impacted by this standard. The adoption of this standard did not have an impact on the Company’s cash flows. For further details, see Note 10. In August 2017, the FASB issued Accounting Standards Update No. 2017-12 (ASU 2017-12), Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments expand and refine hedge accounting for both non-financial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the underlying hedged item in the financial statements. The impact of the standard includes elimination of the requirement to separately measure and recognize hedge ineffectiveness and requires the presentation of fair value adjustments to hedging instruments to be included in the same income statement line as the hedged item. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The Company adopted ASU 2017-12 in the first quarter of 2019 and the adoption of this standard did not have a material impact on the Company’s results or consolidated financial statements. Recently Issued Accounting Pronouncements In March 2019, the FASB issued Accounting Standards Update No. 2019-02 (ASU 2019-02) Entertainment—Films—Other Assets—Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-350) - Improvements to Accounting for Costs of Films and License Agreements for Program Materials. The amendments in this update align cost capitalization of episodic television series production costs with that of film production cost capitalization. In addition, this update addresses impairment testing procedures with regard to film groups, when a film or license agreement is expected to be monetized with other films and/or license agreements. The intention of this update is to align accounting treatment with changes in production and distribution models within the entertainment industry and to provide increased transparency of information provided to users of financial statements about produced and licensed content. For public companies, this standard is effective for annual reporting periods beginning after December 15, 2019, and early adoption is permitted. The Company expects to adopt the standard at the start of fiscal year 2020 and is currently evaluating the standard and the impact, if any, to its consolidated financial statements. Recent Events On August 22, 2019, the Company and Entertainment One Ltd. ("eOne") entered into a definitive agreement under which the Company will acquire all of the outstanding shares of stock of eOne in an all-cash transaction valued at approximately £3,300,000, or $4,000,000 based on exchange rates on the agreement date. Under the terms of the agreement, eOne shareholders will receive £5.60 in cash for each common share of eOne. The Company hedged a portion of its exposure to fluctuations in the British pound sterling in relation to the acquisition purchase price using a series of both foreign exchange forward and option contracts. These contracts do not qualify for hedge accounting and as such, were marked to market through the Company's Consolidated Statement of Operations. The Company recorded after-tax losses of $25,533 on these instruments to other (income) expense, net for the quarter and nine month periods ended September 29, 2019. See Note 9, Derivative Financial Instruments for further details. The Company expects to finance the transaction with a combination of debt and equity financing. On August 22, 2019, the Company entered into a debt commitment letter with Bank of America, N.A. ("BofA") and BofA Securities Inc., pursuant to which BofA (and certain of its affiliates) committed to provide a 364-day senior unsecured bridge loan facility in an aggregate principal amount of up to £3,600,000 to provide funding of the purchase price. Costs associated with the Bridge Facility in the amount of approximately $19,000 are being capitalized and are included in prepaid expenses and other current assets in the Company's consolidated balance sheets. In addition, on September 20, 2019, the Company entered into a Term Loan Agreement (the "Term Loan Agreement") with Bank of America, N.A., as administrative agent and certain financial institutions, as lenders, pursuant to which such lenders committed to provide, contingent upon the completion of the acquisition and certain other customary conditions to funding, (1) a three-year senior unsecured term loan facility in an aggregate principal amount of $400,000 (the "Three-Year Tranche") and (2) a five-year senior unsecured term loan facility in an aggregate principal amount of $600,000 (the "Five-Year Tranche" and, together with the Three-Year Tranche, the "Term Loan Facilities"). Borrowings under the Term Loan Facilities will be used to pay a portion of the cash consideration and other amounts payable in connection with the Company’s acquisition of eOne. The transaction, which is structured as a statutory plan of arrangement under the Canada Business Corporations Act, remains subject to receipt of certain regulatory approvals and other customary closing conditions. The transaction has received approval by eOne’s shareholders as well early termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act in the U.S. and antitrust approval in Germany. On October 17, 2019 the shareholders of eOne approved the transaction. The transaction is expected to close during the fourth quarter of 2019. During the third quarter of 2019, the Company also entered into a second amended and restated revolving credit agreement with BofA, as administrative agent, swing line lender and a letter of credit issuer and certain other financial institutions, as lenders thereto (the "Revolving Credit Agreement"), which provides the Company with commitments having a maximum aggregate principal amount of $1,500,000, comprised of (1) $1,100,000 of commitments effective as of September 20, 2019, and (2) $400,000 of commitments that may become effective upon completion of the acquisition of eOne. The 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 Revolving Credit Agreement also provides for a potential additional incremental commitment increase of up to $500,000 subject to agreement of the lenders. Prior to the September 2019 amendment, the Revolving Credit Agreement provided for a $1,100,000 revolving credit facility. The Company was in compliance with all covenants as of and for the quarter ended September 29, 2019. The Company had no borrowings outstanding under its committed revolving credit facility as of September 29, 2019.

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