(Dollar and share amounts in tables presented in millions, unless otherwise noted) The following discussion and analysis should be read together with the accompanying unaudited consolidated financial statements and the notes thereto included in this Quarterly Report and the audited consolidated financial statements and the notes thereto in the Company's 2025 Form 10-K. 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, 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 In fiscal year 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, we plan to expand our consumer reach as a games, IP, and toy company. In the first half of 2026, we've made exciting new steps on executing the Playing to Win strategy, including: •The release of Marvel Super Heroes, along with all past and future Marvel sets, within Magic: The Gathering Arena, allowing players to jump into the Marvel Universe through Hasbro's online adaption of the iconic Magic: The Gathering card game. •The announcement of a multi-year licensing partnership starting in 2027 with Warner Bros. Discovery Global Consumer Products, making Hasbro the global primary toy licensee for the world of Harry Potter and the upcoming HBO Original Harry Potter series. •The announcement of a licensing collaboration with Amazon MGM Studios to produce action figures, toys and roleplay for the studio’s upcoming live-action Voltron movie and with Legendary Entertainment tied to the live-action Street Fighter movie. •The launch of Sixth Wall Studio, a new AI studio dedicated to bringing iconic characters into the AI era through new channels, such as behavioral licensing. We believe these strategic moves position us to accelerate innovation and drive long-term growth in line with our Playing to Win strategy which emphasizes play-driven engagement and collaboration with partners. Tariffs Significant changes in trade policy announced by the U.S. government could adversely impact our forward-looking financial results. The Company monitors the impact 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. During the first three and six months of 2026, the Company recognized approximately $9.4 million and $17.7 million of tariff costs within Cost of sales, respectively. 29 On February 20, 2026, the U.S. Supreme Court issued a ruling against the International Emergency Economic Powers Act ("IEEPA") tariffs that we and other companies paid to the U.S. government since the enactment on April 2, 2025. In the third quarter of 2026, we made our first application to the U.S. Customs and Border Protection ("CBP") agency seeking a refund for a majority of the IEEPA tariffs we paid, and we plan to submit additional applications later this year when we are permitted. The ultimate timing and amounts received is uncertain and subject to processing by the CBP. These amounts could impact our results in 2026. Unauthorized Network Access In late March 2026, the Company identified unauthorized access to our network. Upon discovery, the Company promptly activated its security incident response protocols, implemented containment measures, including proactively taking certain systems offline, and launched an investigation with the assistance of third-party cybersecurity professionals. Simultaneously, the Company implemented its business continuity plans, including manual ordering and processing procedures at a reduced rate of operations in order to continue servicing its customers. The impacts of these system disruptions included order processing, shipping, and invoicing delays, resulting in a negative impact on net sales and operating profit during the second quarter, particularly within the Consumer Products segment. As of June 28, 2026, the Company has since returned to pre-incident order processing, shipping, and invoicing practices. The Company also incurred incremental expenses of approximately $10.8 million during the three and six months ended June 28, 2026 as a result of the unauthorized network access, including for third-party IT recovery and forensic experts, professional services and other costs incurred to investigate and remediate the attack. The Company expects to incur a less significant amount of additional costs related to the incident in future periods. The Company has not recognized any insurance proceeds during the three months ended June 28, 2026 related to the unauthorized network access. The timing of recognizing insurance recoveries, if any, may differ from the timing of recognizing the associated expenses. Summary of Results The Company's revenue increased from $980.8 million for the three months ended June 29, 2025 to $1,139.6 million for the three months ended June 28, 2026. The increase in revenue is driven primarily by growth in our Wizards of the Coast and Digital Gaming segment, specifically within tabletop gaming driven by Magic: The Gathering. The Company's revenue increased from $1,867.9 million for the six months ended June 29, 2025 to $2,139.8 million for the six months ended June 28, 2026. The increase in revenue is driven primarily by growth in our Wizards of the Coast and Digital Gaming segment, specifically within tabletop gaming. The Company recorded an operating profit of $252.5 million and $522.8 million for the three and six months ended June 28, 2026, respectively, as compared to an operating loss of $798.2 million and $627.5 million for the three and six months ended June 29, 2025, respectively. The change in operating profit was driven by the improved revenue growth discussed above, as well as a one-time $1,021.9 million non-cash goodwill impairment recorded in the Consumer Products segment in the second quarter of 2025. No such impairment occurred during the three and six months ended June 28, 2026. See below for further discussion on the consolidated and segment results of operations for the three and six months ended June 28, 2026 and June 29, 2025. 30 RESULTS OF OPERATIONS The following table presents the consolidated results of operations for the three months ended June 28, 2026 and June 29, 2025: Three Months Ended June 28, 2026 June 29, 2025 Amount % of Net Revenues Amount % of Net Revenues Net revenues $ 1,139.6 100.0 % $ 980.8 100.0 % Costs and expenses: Cost of sales 272.4 23.9 % 225.3 23.0 % Program cost amortization 3.1 0.3 % 6.2 0.6 % Royalties 89.9 7.9 % 84.5 8.6 % Product development 93.6 8.2 % 77.5 7.9 % Advertising 74.8 6.6 % 63.6 6.5 % Amortization of intangible assets 14.6 1.3 % 17.2 1.8 % Impairment of goodwill — — % 1,021.9 104.2 % Selling, distribution and administration 338.7 29.7 % 282.8 28.8 % Total costs and expenses 887.1 77.8 % 1,779.0 181.4 % Operating profit (loss) 252.5 22.2 % (798.2) (81.4) % Non-operating expense: Interest expense 46.5 4.1 % 40.6 4.1 % Interest income (12.9) (1.1) % (5.4) (0.6) % Other expense (income), net 10.2 0.9 % (18.7) (1.9) % Total non-operating expense, net 43.8 3.8 % 16.5 1.7 % Earnings (loss) before income taxes 208.7 18.3 % (814.7) (83.1) % Income tax expense 47.4 4.2 % 40.0 4.1 % Net earnings (loss) 161.3 14.2 % (854.7) (87.1) % Net earnings attributable to noncontrolling interests 0.4 — % 1.1 0.1 % Net earnings (loss) attributable to Hasbro, Inc. $ 160.9 14.1 % $ (855.8) (87.3) % Net earnings (loss) per common share: Basic $ 1.14 $ (6.10) Diluted $ 1.12 $ (6.10) Net revenues – Net revenues for the second quarter of 2026 increased 16.2% to $1,139.6 million from $980.8 million for the second quarter of 2025 primarily driven by growth of $141.4 million, or 27.1%, in the Wizards of the Coast and Digital Gaming segment and $20.6 million, or 4.7%, in the Consumer Products segment. This growth was partially offset by a $3.2 million, or 20%, decrease in the Entertainment segment. See the Segment Results discussion below for further details. As part of our Playing to Win strategy, we have aligned our brand portfolios as follows: •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. 31 The following table presents net revenues by brand portfolio category: Three Months Ended June 28, 2026 June 29, 2025(1) % Change Grow Brands $ 904.9 $ 740.6 22.2 % Optimize Brands 151.7 159.9 (5.1) % Reinvent Brands 83.0 80.3 3.4 % Net revenues $ 1,139.6 $ 980.8 16.2 % (1) During the first quarter of 2026, the classification of brands within these categories was reviewed and certain brands were reclassified based on changes in growth, profitability or other characteristics. As such, the respective historical revenues associated within these brands has been reclassified into the brands' new brand category. GROW BRANDS: Net revenues in the Grow Brands portfolio increased $164.3 million, or 22.2%, in the second quarter of 2026, compared to the second quarter of 2025. The net revenue increase primarily reflects higher net revenues from Magic: The Gathering, which grew by $133.3 million, or 32.3%, driven by strong performance of Secrets of Strixhaven, as well as the Universes Beyond Marvel Super Heroes set released during the quarter. Growth in this category was also impacted by increased demand in toys and games associated with the licensed Marvel and Star Wars brands, driven by a strong content slate in 2026 with no comparable releases in the prior year. OPTIMIZE BRANDS: Net revenues in the Optimize Brands portfolio decreased $8.2 million, or 5.1%, in the second quarter of 2026, compared to the second quarter of 2025, driven by lower net revenues from Play-Doh and Duel Masters. The declines were partially offset with an increase in net revenue from GI Joe. REINVENT BRANDS: Net revenues in the Reinvent Brands portfolio increased $2.7 million, or 3.4%, in the second quarter of 2026 compared to the second quarter of 2025. The net revenue increase is primarily driven by higher product sales for Beyblade and other vault brands, partially offset by lower sales in Nerf and Furby. OPERATING COSTS AND EXPENSES Cost of sales – Cost of sales for the second quarter of 2026 was $272.4 million, or 23.9% of net revenues, compared to $225.3 million, or 23.0% of net revenues, for the second quarter of 2025. The increase in cost of sales was primarily the result of an increase in net revenues period over period, shift in product mix, as well as approximately $9.4 million of cost related to the impacts of tariffs, primarily as it relates to products imported into the United States to be sold domestically. Program cost amortization – Program cost amortization decreased to $3.1 million, or 0.3% of net revenues, for the second quarter of 2026 from $6.2 million, or 0.6% of net revenues, for the second quarter of 2025. Program costs are capitalized as incurred and amortized primarily using the individual-film-forecast method which matches costs to the related recognized revenue and is based upon the current slate of entertainment projects. Royalties – Royalties for the second quarter of 2026 increased to $89.9 million, or 7.9% of net revenues, compared to $84.5 million, or 8.6% of net revenues, for the second quarter of 2025. The increase in Royalties during the second quarter of 2026 was directly driven by an increase in sales relating to Magic: The Gathering Universes Beyond sets, such as Marvel Super Heroes, as well as increased toy and game sales on licensed brands such as Marvel and Star Wars. Product development – Product development expense for the second quarter of 2026 was $93.6 million, or 8.2% of net revenues, compared to $77.5 million, or 7.9% of net revenues, for the second quarter of 2025. The increase in Product development expense during the second quarter of 2026 was primarily due to the higher incremental investment in the development of Grow Brands under the Company's Playing to Win strategy. Advertising – Advertising expense for the second quarter of 2026 was $74.8 million, or 6.6% of net revenues, compared to $63.6 million, or 6.5% of net revenues, for the second quarter of 2025. The Advertising expense increase during the second quarter of 2026 was primarily driven by additional spend necessary to support top line growth opportunities within the Grow Brands category, specifically within the Wizards of the Coast and Digital Gaming segment. Amortization of intangible assets – Amortization of intangible assets decreased to $14.6 million, or 1.3% of net revenues, for the second quarter of 2026, compared to $17.2 million, or 1.8% of net revenues, for the second quarter of 2025. The amortization expense was driven by the straight-line amortization of the Company's definite-lived intangible assets. 32 Impairment of Goodwill – During the second quarter of 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 was no such impairment charge recorded during the second quarter of 2026. Selling, distribution and administration – Selling, distribution and administration expenses increased to $338.7 million, or 29.7% of net revenues for the second quarter of 2026, from $282.8 million, or 28.8% of net revenues, for the second quarter of 2025. The increase in Selling, distribution and administration expenses during the second quarter of 2026 is primarily the result of a one-time $56.4 million non-cash impairment charge related to the Company's decision to refocus the Digital Games portfolio, which included the cancellation of certain titles scheduled for release in 2028 and beyond, as well as $10.8 million of incremental costs incurred as a result of the unauthorized network access, partially offset by benefits from cost savings initiatives that have occurred over the last 12 months. Operating profit (loss) – Operating profit for the second quarter of 2026 was $252.5 million, or 22.2% of net revenues, compared to operating loss of $798.2 million, or 81.4% of net revenues, for the second quarter of 2025 driven by the factors discussed above. NON-OPERATING EXPENSE Interest expense – Interest expense was $46.5 million for the second quarter of 2026, compared to $40.6 million in the second quarter of 2025. Higher interest expense in 2026 is primarily the result of an increase in outstanding debt driven by issuance of the 2031 Notes, partially offset by debt repurchases of the Company's outstanding 2027, 2040, and 2044 Notes. Interest income – Interest income was $12.9 million for the second quarter of 2026, compared to $5.4 million in the second quarter of 2025. Higher Interest income in 2026 primarily reflects the Company's cash balance and investments in treasury securities, which were substantially higher in 2026 as compared to 2025. Other expense (income), net – Other expense (income), net resulted in expense of $10.2 million for the second quarter of 2026, compared to income of $18.7 million in the second quarter of 2025. The change in Other expense (income), net during 2026 was driven primarily by variations in the movement of foreign currencies in the second quarter of 2026 when compared to the second quarter of 2025. INCOME TAXES Income tax expense totaled $47.4 million on a pre-tax income of $208.7 million in the second quarter of 2026 compared to an income tax expense of $40.0 million on pre-tax loss of $814.7 million in the second quarter of 2025. Both periods were impacted by discrete tax events. During the second quarter of 2026, the Company recorded a net discrete tax benefit of $1.0 million primarily associated with the release of uncertain tax positions resulting from the expiration of certain international statutes of limitations. During the second quarter of 2025, the Company recorded a non-cash goodwill impairment within the Consumer Products segment of $1,021.9 million with no corresponding tax benefit. Exclusive of the impairment of goodwill, the Company recorded a net discrete tax benefit of $5.9 million, primarily associated with the release of a valuation allowance. Absent discrete items, the tax rates for the second quarter of 2026 and 2025 were 23.2% and 22.1%, respectively. The increase in the base rate for the second quarter of 2026 relative to the second quarter of 2025 is primarily due to the mix of jurisdictions where the Company earned its profits. 33 SEGMENT RESULTS The following table presents net external revenues and operating profit for the Company's reportable segments for the three months ended June 28, 2026 and June 29, 2025: Three Months Ended June 28, 2026 June 29, 2025 % Change Net revenues: Wizards of the Coast and Digital Gaming $ 663.8 $ 522.4 27.1 % Consumer Products 463.0 442.4 4.7 % Entertainment 12.8 16.0 (20.0) % Total Net revenues $ 1,139.6 $ 980.8 16.2 % Operating profit (loss): Wizards of the Coast and Digital Gaming $ 270.0 $ 241.9 11.6 % Consumer Products(1) (14.5) (1,029.5) NM Entertainment 5.6 6.1 (8.2) % Corporate and Other(1) (8.6) (16.7) NM Total Operating profit (loss) $ 252.5 $ (798.2) NM (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: Three Months Ended June 28, 2026 June 29, 2025 % Change Tabletop Gaming $ 528.3 $ 406.3 30.0 % Digital and Licensed Gaming 135.5 116.1 16.7 % Net revenues $ 663.8 $ 522.4 27.1 % Wizards of the Coast and Digital Gaming segment net revenues increased 27.1% in the second quarter of 2026 to $663.8 million from $522.4 million in the second quarter of 2025. The net revenue increase in the Wizards of the Coast and Digital Gaming segment during the second quarter of 2026 was primarily attributable to an increase in Tabletop Gaming revenue which grew 30.0% behind demand in Magic: The Gathering, driven by the release of the Secrets of Strixhaven and Universes Beyond Marvel Super Heroes sets. This growth was accompanied by an increase in digital licensing revenue related to Monopoly Go!, which contributed $44.2 million of revenue during the quarter. Wizards of the Coast and Digital Gaming segment operating profit was $270.0 million, or 40.7% of segment net revenues for the second quarter of 2026, compared to operating profit of $241.9 million, or 46.3% of segment net revenues, for the second quarter of 2025. Operating profit increased during the second quarter of 2026 due to increased net revenues, as discussed above. Operating margin decreased during the second quarter of 2026, primarily driven by a one-time $56.4 million non-cash impairment charge related to the Company's decision to refocus the Digital Games portfolio, which included the cancellation of certain titles scheduled for release in 2028 and beyond. Consumer Products Segment 34 The following table presents the Consumer Products segment net revenues by major geographic region: Three Months Ended June 28, 2026 June 29, 2025 % Change North America $ 277.0 $ 236.0 17.4 % Europe 92.9 95.7 (2.9) % Asia Pacific 53.2 63.6 (16.4) % Latin America 39.9 47.1 (15.3) % Net revenues $ 463.0 $ 442.4 4.7 % Consumer Products segment net revenues increased to $463.0 million for the second quarter of 2026 compared to $442.4 million for the second quarter of 2025, primarily driven by the timing of retail orders in North America and an enhanced slate of entertainment content releases. The net revenue increase primarily reflects higher net revenues for toys and games, particularly for certain Grow Brands such as Marvel and Star Wars, which were positively impacted by an uptick in demand in advance of major theatrical releases throughout 2026 with no comparable releases in the prior year. The increase in toy and game revenues was partially offset by a decrease in licensing revenues, primarily attributable to the lapping of licensing revenue related to My Little Pony, which decreased $9.7 million. Consumer Products segment operating loss for the second quarter of 2026 was $14.5 million, or 3.1% of segment net revenues, compared to a segment operating loss of $1,029.5 million, or 232.7% of segment net revenues, for the second quarter of 2025. The change in operating loss in the second quarter of 2026 was driven primarily by the non-cash goodwill impairment charge of $1,021.9 million recorded during the second quarter of 2025, offset by tariff costs of approximately $6.2 million. Entertainment Segment The following table presents Entertainment segment net revenues by category: Three Months Ended June 28, 2026 June 29, 2025 % Change Family Brands $ 11.8 $ 14.5 (18.6) % Film and TV 1.0 1.5 (33.3) % Net revenues $ 12.8 $ 16.0 (20.0) % Entertainment segment net revenues decreased 20.0% to $12.8 million for the second quarter of 2026, compared to $16.0 million for the second quarter of 2025. The net revenue decrease in the Entertainment segment during the second quarter of 2026 was driven primarily by the timing of entertainment streaming renewals and other content deals. Entertainment segment operating profit was $5.6 million, or 43.8% of segment net revenues for the second quarter of 2026, compared to an operating profit of $6.1 million, or 38.1% of segment net revenues for the second quarter of 2025. The decrease in operating profit in the Entertainment segment operating results during the second quarter of 2026 was primarily driven by the decrease in revenue discussed above. Corporate and Other Corporate and Other operating loss was $8.6 million for the second quarter of 2026 compared to an operating loss of $16.7 million for the second quarter of 2025. The change in operating loss in the second quarter of 2026 as compared to the second quarter of 2025 primarily reflects the impacts of cost saving initiatives at the Company over the last 12 months, partially offset by incremental costs incurred related to the unauthorized network access described above. 35 RESULTS OF OPERATIONS The following table presents the consolidated results of operations for the six months ended June 28, 2026 and June 29, 2025: Six Months Ended June 28, 2026 June 29, 2025 Amount % of Net Revenues Amount % of Net Revenues Net revenues $ 2,139.8 100.0 % $ 1,867.9 100.0 % Costs and expenses: Cost of sales 508.5 23.8 % 429.8 23.0 % Program cost amortization 7.1 0.3 % 13.6 0.7 % Royalties 167.6 7.8 % 141.5 7.6 % Product development 171.6 8.0 % 158.0 8.5 % Advertising 135.2 6.3 % 119.0 6.4 % Amortization of intangible assets 29.2 1.4 % 34.2 1.8 % Impairment of goodwill — — % 1,021.9 54.7 % Loss on disposal of business — — % 25.0 1.3 % Selling, distribution and administration 597.8 27.9 % 552.4 29.6 % Total costs and expenses 1,617.0 75.6 % 2,495.4 133.6 % Operating profit (loss) 522.8 24.4 % (627.5) (33.6) % Non-operating expense: — % Interest expense 88.3 4.1 % 82.2 4.4 % Interest income (23.0) (1.1) % (14.3) (0.8) % Other expense (income), net 4.7 0.2 % (17.3) (0.9) % Total non-operating expense, net 70.0 3.3 % 50.6 2.7 % Earnings (loss) before income taxes 452.8 21.2 % (678.1) (36.3) % Income tax expense 92.0 4.3 % 77.1 4.1 % Net earnings (loss) 360.8 16.9 % (755.2) (40.4) % Net earnings attributable to noncontrolling interests 1.5 0.1 % 2.0 0.1 % Net earnings (loss) attributable to Hasbro, Inc. $ 359.3 16.8 % $ (757.2) (40.5) % Net earnings (loss) per common share: Basic $ 2.54 $ (5.41) Diluted $ 2.51 $ (5.41) Net revenues – Net revenues for the first six months of 2026 increased 14.6% to $2,139.8 million from $1,867.9 million for the first six months of 2025, primarily driven by a $261.3 million, or 26.5%, increase in the Wizards of the Coast and Digital Gaming segment as well as a $20.2 million, or 2.4%, increase in the Consumer Products segment, offset by a $9.6 million, or 22.5%, decrease in the Entertainment segment. See the Segment Results discussion below for further details. The following table presents net revenues by brand portfolio category: Six Months Ended June 28, 2026 June 29, 2025(1) % Change Grow Brands $ 1,692.4 $ 1,401.4 20.8 % Optimize Brands 278.6 290.7 (4.2) % Reinvent Brands 168.8 175.8 (4.0) % Net revenues $ 2,139.8 $ 1,867.9 14.6 % 36 (1) During the first quarter of 2026, the classification of brands within these categories was reviewed and certain brands were reclassified based on changes in growth, profitability or other characteristics. As such, the respective historical revenues associated within these brands has been reclassified into the brands' new brand category. GROW BRANDS: Net revenues in the Grow Brands portfolio increased $291.0 million, or 20.8%, in the first six months of 2026, compared to the first six months of 2025. The net revenue increase primarily reflects higher net revenues from Magic: The Gathering, which grew by $256.6 million, or 33.8%, driven by strong performance of Lorwyn Eclipsed and Secrets of Strixhaven, as well as Universes Beyond sets such as Teenage Mutant Ninja Turtles and Marvel Super Heroes, which released within the first six months of 2026. Growth in this category was also impacted by increased demand in toys and games associated with the licensed Marvel and Star Wars brands, driven by a strong content slate in 2026 with no comparable releases in the prior year. OPTIMIZE BRANDS: Net revenues in the Optimize Brands portfolio decreased $12.1 million, or 4.2%, in the first six months of 2026, compared to the first six months of 2025. The net revenue decrease is primarily driven by lower net revenues from Transformers, Play-Doh, and Duel Masters. The declines were partially offset with an increase in net revenue from GI Joe. REINVENT BRANDS: Net revenues in the Reinvent Brands portfolio decreased $7.0 million, or 4.0%, in the first six months of 2026 compared to the first six months of 2025. The net revenue decrease is primarily driven by lower product sales for Baby Alive, Furby, and other vault brands, partially offset by higher sales in Beyblade and Nanomals. OPERATING COSTS AND EXPENSES Cost of sales – Cost of sales for the first six months of 2026 was $508.5 million, or 23.8% of net revenues, compared to $429.8 million, or 23.0% of net revenues, for the first six months of 2025. The increase in Cost of sales was primarily the result of an increase in net revenues period over period, shift in product mix, as well as approximately $17.7 million of cost related to the impacts of tariffs, primarily as it relates to products imported into the United States to be sold domestically. Program cost amortization – Program cost amortization decreased to $7.1 million, or 0.3% of net revenues, for the first six months of 2026 from $13.6 million, or 0.7% of net revenues, for the first six months of 2025. Program costs are capitalized as incurred and amortized primarily using the individual-film-forecast method which matches costs to the related recognized revenue and is based upon the current slate of entertainment projects. Royalties – Royalties for the first six months of 2026 increased to $167.6 million, or 7.8% of net revenues, compared to $141.5 million, or 7.6% of net revenues, for the first six months of 2025. The increase in Royalties for the first six months of 2026 was directly driven by an increase in sales relating to Magic: The Gathering Universes Beyond sets, such as Teenage Mutant Ninja Turtles and Marvel Super Heroes, as well as increased toy and game sales on licensed brands such as Marvel and Star Wars. Product development – Product development expense for the first six months of 2026 was $171.6 million, or 8.0% of net revenues, compared to $158.0 million, or 8.5% of net revenues, for the first six months of 2025. The increase in Product development expense during the first six months of 2026 was primarily due to the Company's higher incremental investment in the developments of Grow Brands under the Company's Playing to Win strategy. Advertising – Advertising expense for the first six months of 2026 was $135.2 million, or 6.3% of net revenues, compared to $119.0 million, or 6.4% of net revenues, for the first six months of 2025. The Advertising expense increase during the first six months of 2026 was primarily driven by additional spend necessary to support top line growth opportunities within the Grow Brands category, specifically within the Wizards of the Coast and Digital Gaming segment. Amortization of intangibles – Amortization of intangible assets decreased to $29.2 million, or 1.4% of net revenues, for the first six months of 2026, as compared to $34.2 million, or 1.8% of net revenues, for the first six months of 2025. The amortization expense was driven by the straight-line amortization of the Company's definite-lived intangible assets. Impairment of goodwill – During the first six months of 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 was no such impairment charge recorded during the first six months of 2026. Loss on disposal of business – During the first six months of 2025, the Company recorded a $25.0 million loss on disposal of business associated with the divestiture of the Company's non-core film and TV business (the "eOne Film and TV business") within the Entertainment segment. No such charges were recorded during the first six months of 2026. 37 Selling, distribution and administration – Selling, distribution and administration expenses increased to $597.8 million, or 27.9% of net revenues for the first six months of 2026, from $552.4 million, or 29.6% of net revenues, for the first six months of 2025. The increase in Selling, distribution and administration expenses during the first six months of 2026 was primarily the result of a one-time $56.4 million non-cash impairment charge related to the Company's decision to refocus the Digital Games portfolio, which included the cancellation of certain titles scheduled for release in 2028 and beyond, as well as $10.8 million of incremental operating costs incurred as a result of the unauthorized network access, partially offset by benefits from cost savings initiatives that have occurred over the last 12 months. Operating profit (loss) – Operating profit for the first six months of 2026 was $522.8 million, or 24.4% of net revenues, compared to an operating loss of $627.5 million, or 33.6% of net revenues, for the first six months of 2025 driven by the factors discussed above. NON-OPERATING EXPENSE Interest expense – Interest expense for the first six months of 2026 totaled $88.3 million compared to $82.2 million in the first six months of 2025. Higher interest expense in 2026 is primarily the result of an increase in outstanding debt driven by issuance of the 2031 Notes, partially offset by debt repurchases of the Company's outstanding 2027, 2040, and 2044 Notes. Interest income – Interest income was $23.0 million for the first six months of 2026, compared to $14.3 million in the first six months of 2025. Higher Interest income in 2026 primarily reflects the Company's cash balance and investments in treasury securities, which were substantially higher in 2026 as compared to 2025. Other expense (income), net – Other expense (income), net resulted in expense of $4.7 million for the first six months of 2026, compared to income of $17.3 million in the first six months of 2025. The change in Other expense (income), net during 2026 was driven primarily by variations in the movement of foreign currencies in the first six months of 2026 when compared to the first six months of 2025. INCOME TAXES Income tax expense totaled $92.0 million on a pre-tax income of $452.8 million in the first six months of 2026 compared to an income tax expense of $77.1 million on pre-tax loss of $678.1 million in the first six months of 2025. Both periods were impacted by discrete tax events. During the first six months of 2026, the Company recorded a net discrete tax benefit of $9.8 million primarily associated with share-based compensation. During the first six months of 2025, the Company recorded a non-cash goodwill impairment within the Consumer Products segment of $1,021.9 million and an unfavorable adjustment to the Loss on disposal of the eOne Film and TV business of $25.0 million. Neither adjustment had a corresponding tax benefit. The Company also recorded a net discrete tax benefit of $6.2 million, primarily associated with the release of a valuation allowance. Absent discrete items, the tax rates for the first six months of 2026 and 2025 were 22.5% and 22.6%, respectively. The decrease in the base rate for the first six months of 2026 relative to the first six months of 2025 is primarily due to the mix of jurisdictions where the Company earned its profits. 38 SEGMENT RESULTS The following table presents net external revenues and operating profit (loss) for the Company's reportable segments for the six months ended June 28, 2026 and June 29, 2025: Six Months Ended June 28, 2026 June 29, 2025 % Change Net revenues: Wizards of the Coast and Digital Gaming $ 1,245.8 $ 984.5 26.5 % Consumer Products 860.9 840.7 2.4 % Entertainment 33.1 42.7 (22.5) % Total net revenues $ 2,139.8 $ 1,867.9 14.6 % Operating profit (loss): Wizards of the Coast and Digital Gaming $ 567.7 $ 471.8 20.3 % Consumer Products (62.0) (1,073.5) (94.2) % Entertainment(1) 22.9 (4.9) NM Corporate and Other (5.8) (20.9) (72.2) % Total Operating profit (loss)(1) $ 522.8 $ (627.5) NM (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: Six Months Ended June 28, 2026 June 29, 2025 % Change Tabletop Gaming $ 989.0 $ 750.1 31.8 % Digital and Licensed Gaming 256.8 234.4 9.6 % Net revenues $ 1,245.8 $ 984.5 26.5 % Wizards of the Coast and Digital Gaming segment net revenues increased 26.5% in the first six months of 2026 to $1,245.8 million from $984.5 million in the first six months of 2025. Tabletop Gaming revenue increased 31.8% behind growth in Magic: The Gathering, primarily due to strong demand for Lorwyn Eclipsed and Secrets of Strixhaven, as well as Universes Beyond sets such as Teenage Mutant Ninja Turtles and Marvel Super Heroes. This growth was accompanied by an increase in digital licensing revenue related to Monopoly Go!, which contributed $85.7 million of revenue during the year. Wizards of the Coast and Digital Gaming segment operating profit was $567.7 million, or 45.6% of segment net revenues for the first six months of 2026, compared to operating profit of $471.8 million, or 47.9% of segment net revenues, for the first six months of 2025. The operating profit increase during the first six months of 2026 was primarily driven by increased net revenues, as discussed above. Operating margin decreased during the first six months of 2026, primarily driven by a one-time $56.4 million non-cash impairment charge related to the Company's decision to refocus the Digital Games portfolio, which included the cancellation of certain titles scheduled for release in 2028 and beyond. 39 Consumer Products Segment The following table presents the Consumer Products segment net revenues by major geographic region: Six Months Ended June 28, 2026 June 29, 2025 % Change North America $ 492.4 $ 467.4 5.3 % Europe 192.5 180.7 6.5 % Asia Pacific 107.0 117.4 (8.9) % Latin America 69.0 75.2 (8.2) % Net revenues $ 860.9 $ 840.7 2.4 % The Consumer Products segment net revenues increased 2.4% to $860.9 million for the first six months of 2026 compared to $840.7 million for the first six months of 2025 primarily driven by broader industry trends and timing of retail orders. The net revenue increase primarily reflects higher toy and game revenues, particularly for certain Grow Brands such as Marvel and Star Wars, which were positively impacted by a rise in demand in advance of major theatrical releases throughout 2026 with no comparable releases in the prior year. The increase in toy and game revenues was partially offset by a decrease in licensing revenues, primarily attributable to the lapping of licensing revenue related to My Little Pony, which decreased $10.8 million. Consumer Products segment operating loss for the first six months of 2026 was $62.0 million, or 7.2% of segment net revenues, compared to a segment operating loss of $1,073.5 million, or 127.7% of segment net revenues, for the first six months of 2025. The change in operating loss in the first six months of 2026 was primarily driven by the non-cash goodwill impairment charge of $1,021.9 million recorded during 2025, offset by tariff costs in 2026 of approximately $14.5 million. Entertainment Segment The following table presents Entertainment segment net revenues by category: Six Months Ended June 28, 2026 June 29, 2025 % Change Family Brands $ 30.4 $ 36.9 (17.6) % Film and TV 2.7 5.8 (53.4) % Net revenues $ 33.1 $ 42.7 (22.5) % Entertainment segment net revenues decreased 22.5% to $33.1 million for the first six months of 2026, compared to $42.7 million for the first six months of 2025. The net revenue decrease in the Entertainment segment during the first six months of 2025 was driven primarily by timing of entertainment streaming renewals and other content deals. Entertainment segment operating profit was $22.9 million, or 69.2% of segment net revenues, for the first six months of 2026, compared to an operating loss of $4.9 million, or 11.5% of segment net revenues, for the first six months of 2025. The increase in operating profit in the Entertainment segment during the first six months of 2026 was driven by the non-recurring $25.0 million Loss on disposal of business that was recorded in 2025. Corporate and Other Corporate and Other operating loss was $5.8 million for the first six months of 2026 compared to an operating loss of $20.9 million for the first six months of 2025. The operating loss in the first six months of 2026 was lower when compared to the operating loss in the first six months of 2025 as a result of benefits from cost saving initiatives that have occurred over the last 12 months, partially offset by incremental costs incurred related to the unauthorized network access described above. 40 OTHER INFORMATION Commitments and Contingencies Refer to Item 7 of our 2025 Form 10-K for additional information regarding the Company’s cash obligations and commitments as of the end of fiscal year 2025. Additionally, refer to Note 16, Commitments and Contingencies, to the consolidated financial statements for a discussion of the Company’s commitments and contingencies. Contractual obligations and commercial commitments, as detailed in the Company's 2025 Form 10-K, did not materially change outside of certain payments made in the normal course of business and as otherwise set forth in this report. LIQUIDITY AND CAPITAL RESOURCES The Company has historically generated a significant amount of cash from operations. The Company primarily funds its operations and liquidity needs through cash on hand and from cash flows from operations, and when needed, borrowings under its commercial paper program and available lines of credit. The Company believes that the funds available to it, including cash expected to be generated from operations, funds available through its commercial paper program or its available lines of credit, are adequate to meet its working capital needs for the next twelve months. The Company may also issue debt or equity securities from time to time to provide additional sources of liquidity when pursuing opportunities to enhance our long-term competitive position, while maintaining a strong balance sheet. The impact of tariffs recognized by the Company in Cost of sales was approximately $17.7 million during the first six months of 2026. 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. As of June 28, 2026, no application related to refunds of amounts paid to date had been submitted to the CBP. In the third quarter of 2026, we made our first application to the CBP seeking a refund for a majority of the IEEPA tariffs we paid, and we plan to submit additional applications later this year when we are permitted. The ultimate timing and amounts received is uncertain and subject to processing by the CBP. These amounts could impact our results in 2026. As of June 28, 2026, the Company's cash and cash equivalents totaled $880.5 million and the Company's Short-term investments totaled $497.7 million. The majority of the Company’s cash and cash equivalents held outside of the United States as of June 28, 2026 are denominated in the U.S. dollar. Under the Company’s commercial paper program, at the request of the Company and subject to market conditions, the Company may issue notes from time to time up to an aggregate principal amount outstanding at any given time of $1.0 billion. The Company intends to use the commercial paper program as its primary short-term borrowing facility. As of June 28, 2026, the Company had no outstanding borrowings related to the commercial paper program. On February 20, 2026, the Company entered into a Fourth Amended and Restated Revolving Credit Agreement which amended and restated the third amended and restated revolving credit agreement to extend the maturity date through February 20, 2031 and reduce the aggregate principal amount to $1.1 billion. The revolving credit facility also provides for a potential additional incremental commitment increase of up to $550.0 million subject to agreement of the lenders. The Company's revolving credit facility 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 June 28, 2026. The Company had no borrowings outstanding under its revolving credit facility as of June 28, 2026. However, letters of credit outstanding under this facility as of June 28, 2026 were approximately $3.3 million. Amounts available and unused under the revolving credit facility at June 28, 2026 were approximately $1.1 billion, inclusive of borrowings under the Company’s commercial paper program. The Company also has other uncommitted lines from various banks, of which approximately $7.4 million was utilized as of June 28, 2026. Of the amount utilized under, or supported by, the uncommitted lines, the full $7.4 million represented letters of credit. As of June 28, 2026, the Company had $3.6 billion of long-term debt due at varying times from 2026 through 2044. Of the total principal amount of long-term debt, $497.0 million is current as of June 28, 2026 which represents the Company's 3.55% fixed-rate notes due November 2026. In March 2026, the Company issued an aggregate of $400.0 million in senior unsecured debt securities that bear a fixed interest rate of 4.65% due 2031 (the "2031 Notes"). The 2031 Notes were issued with an original issuance discount of $0.6 million and the Company capitalized $3.7 million of debt issuance costs. The original issuance discount and debt issuance costs will be amortized over the term of the 2031 Notes. As of June 28, 2026, the 41 Company has invested the proceeds from the 2031 Notes into Short-term investments that is expected to be utilized to repay the 2026 Notes, while simultaneously using any excess funds to repurchase longer-dated outstanding debt. 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 2026, the Company has repurchased $125.0 million of outstanding debt. The Company has a supplier finance program which provides participating suppliers the option of receiving payment in advance of an invoice due date, to be paid by certain administering banks, on the basis of invoices that the Company has confirmed as valid and approved. The Company’s obligation is to make payment in the invoice amount negotiated with participating suppliers, to the administering banks on the invoice due date. The Company’s suppliers are not required to participate in the supplier finance program. The early payment transactions between the Company’s supplier and the administering bank are subject to an agreement between those parties, and the Company does not participate in any financial aspect of the agreements between the Company’s suppliers and the administering banks. The Company has not pledged any assets to the administering bank under the supplier financing program. The Company or the administering bank may terminate the agreement upon at least 30 days’ written notice. The amount of obligations confirmed under the supplier finance program that remain unpaid by the Company were $56.5 million, $67.8 million, and $45.7 million as of June 28, 2026, June 29, 2025 and December 28, 2025, 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. Cash Flow The following table summarizes the changes in the Consolidated Statements of Cash Flows: Six Months Ended June 28, 2026 June 29, 2025 Net cash provided (utilized) by: Operating activities $ 604.4 $ 209.4 Investing activities $ (524.6) $ (89.2) Financing activities $ 23.5 $ (274.6) Net cash provided by Operating activities in the first six months of 2026 was $604.4 million compared to $209.4 million in the first six months of 2025. The $395.0 million increase in net cash provided by Operating activities after adjusting for non-cash items, was primarily attributable to improved operating results, as well as changes in net working capital, specifically the collection of Accounts receivable, which was a direct result of sales growth in 2025, as well as a non-recurring $57.4 million repatriation tax payment that occurred in 2025 Net cash utilized by Investing activities was $524.6 million in the first six months of 2026 compared to $89.2 million in the first six months of 2025. Additions to property, plant and equipment and software was $41.2 million and $54.0 million in the first six months of 2026, respectively, compared to $29.9 million and $61.8 million in the first six months of 2025, respectively. Additionally, purchases of Short-term investments of $423.0 million, which represent prefunding of future debt maturities with U.S. Treasury securities, occurred in the first six months of 2026, compared to net purchases of Short-term Investments of $10.0 million in the first six months of 2025. The level of purchases during 2026 was impacted by the intent to utilize the investments, together with available cash, to repay indebtedness of the Company that is due in November 2026. Net cash provided by Financing activities was $23.5 million in the first six months of 2026 compared to net cash utilized by Financing activities of $274.6 million in the first six months of 2025. The primary source of cash inflows during first six months of 2026 was $399.4 million of proceeds from the issuance of the 2031 Notes, offset by dividends paid of $197.6 million, repayments of long-term debt of $123.3 million, and $44.7 million of payments related to tax withholdings for share compensation coinciding with equity award vesting activity. Share repurchases during the first six months of 2026 include $41.5 million or 474,667 shares of Common Stock under a share repurchase authorization approved by the Company's Board of Directors in February 2026. As of June 28, 2026, there is $958 million remaining on the authorization. Financing activities in the first six months of 2025 included 42 dividends paid of $196.0 million, repayments of long-term debt of $60.5 million, and $19.9 million of payments related to tax withholdings for share compensation coinciding with equity award vesting activity. CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES We have prepared the consolidated financial statements in accordance with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. These estimates are based on our best judgment about current and future conditions, but actual results could differ from those estimates. Information with respect to accounting estimates that are the most critical to the understanding of our financial statements as they could have the most significant effect on our reported results and require subjective or complex judgments by management is contained in Item 7, 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 28, 2025. We believe that at June 28, 2026, there has been no material change to this information. 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 America 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. The Company is also exposed to foreign currency risk with respect to its net cash and cash equivalents or short-term borrowing positions in currencies other than the U.S. dollar. The Company believes, however, that the on-going risk on the net exposure should not be material to its financial condition. In addition, the Company's revenues and costs have been and will likely continue to be affected by changes in foreign currency rates. A significant change in foreign exchange rates can materially impact the Company's revenues and earnings due to translation of foreign-denominated revenues and expenses. The Company does not hedge against translation impacts of foreign exchange. From time to time, affiliates of the Company may make or receive intercompany loans in currencies other than their functional currency. The Company manages this exposure at the time the loan is made by using foreign exchange contracts. The Company reflects all 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. Refer to Note 14, Derivative Financial Instruments, to the Company’s consolidated financial statements for further details on the Company's derivative financial instruments. As of June 28, 2026, the Company had fixed-rate debt of $3.6 billion. 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.