The following discussion should be read in conjunction with the audited consolidated financial statements of the Company included in Part II Item 8 of this document.

This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements concerning the Company's expectations and beliefs. See Item 1A "Forward-Looking Information and Risk Factors That May Affect Future Results" for a discussion of other uncertainties, risks and assumptions associated with these statements.

Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in thousands of dollars or shares, except for per share amounts.

EXECUTIVE SUMMARY

Hasbro, Inc. ("Hasbro" or the "Company") is a branded play company dedicated to fulfilling the fundamental need for play for children and families through creative expression of the Company's world class brand portfolio. From toys and games, to television programming, motion pictures, digital gaming and a comprehensive licensing program, Hasbro applies its brand blueprint to its broad portfolio of properties. The brand blueprint revolves around the objectives of continuously re-imagining, re-inventing and re-igniting the Company's existing brands, imagining, inventing and igniting new brands, and offering consumers the ability to experience the Company's brands in all areas of their lives.

To accomplish these objectives, the Company offers consumers the ability to experience its branded play through innovative toys and games, digital media, lifestyle licensing and publishing and entertainment, including television programming and motion pictures. The Company's focus remains on growing owned and controlled brands, developing new and innovative products and brands which respond to market insights, offering entertainment experiences which allow consumers to experience the Company's brands across multiple forms and formats, and optimizing efficiencies within the Company to increase operating margins and maintain a strong balance sheet.

The Company earns revenue and generates cash primarily through the sale of a broad variety of toy and game products and distribution of television programming based on the Company's properties, as well as through the out-licensing of rights for use of its properties in connection with complementary products, including digital media and games and lifestyle products, offered by third parties. The Company's brand architecture includes franchise brands, challenger brands, gaming mega brands, key licensed brands and new brands. The Company's franchise and challenger brands represent Company-owned brands or brands which if not entirely owned, are broadly controlled by the Company, and which have been successful over the long term. Franchise brands are the Company's most significant owned or controlled brands which have the ability to deliver significant revenue over the long-term. Challenger brands are brands which have not achieved franchise brand status yet, but have the potential to do so with investment and time. These franchise and challenger brands include TRANSFORMERS, NERF, LITTLEST PET SHOP, MY LITTLE PONY, FURREAL FRIENDS, BABY ALIVE, G.I. JOE, MONOPOLY, MAGIC: THE GATHERING, PLAY-DOH and PLAYSKOOL. The Company has a large portfolio of owned and controlled brands, which can be introduced in new forms and formats over time. These brands may also be further extended by pairing a licensed concept with an owned or controlled brand. By focusing on these brands, the Company is working to build a more consistent revenue stream and basis for future growth, and to leverage profitability. During 2012 the Company had strong revenues from owned or controlled brands such as NERF, MAGIC: THE GATHERING, TRANSFORMERS, PLAY-DOH, FURREAL FRIENDS, LITTLEST PET SHOP, PLAYSKOOL, MONOPOLY and MY LITTLE PONY.

The Company's innovative product offerings encompass a broad variety of toys including boys' action figures, vehicles and playsets, girls' toys, electronic toys, plush products, preschool toys and infant products, electronic interactive products, creative play and toy-related specialty products. Games offerings include boys' action, board, off-the-board, digital, card, electronic, trading card and role-playing games.

While the Company believes it has built a more sustainable revenue base by developing and maintaining its owned or controlled brands and avoiding reliance on licensed entertainment properties, it continues to

opportunistically enter into or leverage existing strategic licenses which complement its brands and key strengths and allow the Company to offer innovative products based on movie, television, music and other entertainment properties owned by third parties. The Company's primary licenses include its agreements with Marvel Characters B.V. ("Marvel") for characters in the Marvel universe, including SPIDER-MAN and THE AVENGERS; Lucas Licensing, Ltd. ("Lucas"), related to the STAR WARS brand; and Sesame Workshop, related to the SESAME STREET characters. Both Marvel and Lucas are owned by The Walt Disney Company. Sales of MARVEL products are dependent upon the number and quality of theatrical releases in any given year. In 2012, the Company had significant sales of MARVEL products, particularly from sales of products related to the movie releases of MARVEL'S THE AVENGERS and THE AMAZING SPIDER-MAN. In 2011, the Company had sales of MARVEL products, including sales of products related to the Marvel movie releases of THOR and CAPTAIN AMERICA: THE FIRST AVENGER. In 2010, the Company had significant sales of products related to the Marvel movie release of IRON MAN 2. During 2013 the Company will market products related to three expected theatrical motion picture releases based on MARVEL properties, IRON MAN 3, THE WOLVERINE and THOR: THE DARK WORLD. The Company re-introduced BEYBLADE products, another licensed entertainment property, during the second half of 2010 and had significant sales in both 2011 and 2012. In addition to offering products based on licensed entertainment properties, the Company also offers products which are licensed from outside inventors.

The Company also seeks to build all-encompassing brand experiences and drive product-related revenues by increasing the visibility of its brands through entertainment such as motion pictures and television programming. Since 2007, the Company has had a number of motion pictures based on its brands released by major motion picture studios including three motion pictures based on its TRANSFORMERS brand, one motion picture based on its G.I. JOE brand and one motion picture based on its mega gaming brand, BATTLESHIP. The Company developed and marketed product lines based on these motion pictures. The next motion picture based on the Company's properties is G.I. JOE: RETALIATION which is scheduled to be released in March of 2013 by Paramount Pictures. The Company has motion picture projects based on other brands in development for potential release in future years.

In addition to using motion pictures to provide entertainment experiences for its brands, the Company has an internal wholly-owned production studio, Hasbro Studios, which is responsible for the creation and development of television programming based primarily on Hasbro's brands. This programming is currently aired throughout the world. The Company is a 50% partner in a joint venture with Discovery Communications, Inc. ("Discovery") which runs THE HUB, a cable television network in the United States dedicated to high-quality children's and family entertainment and educational programming. Programming on THE HUB includes content based on Hasbro's brands, Discovery's library of children's educational programming, as well as programming developed by third parties. Hasbro Studios programming is distributed in the U.S. to THE HUB, other leading children's networks internationally and on various digital platforms, such as Netflix and iTunes. The Company's television initiatives support its strategy of growing its brands well beyond traditional toys and games and providing entertainment experiences for consumers of all ages in any form or format.

The Company's strategic blueprint and brand architecture also focus on extending its brands further into digital media and gaming, including through the licensing of the Company's properties to a number of partners who develop and offer digital games and other gaming experiences based on those brands. An example of these digital gaming relationships is the Company's agreement with Electronic Arts Inc. ("EA"), which provides EA the exclusive worldwide rights, subject to existing limitations on the Company's rights and certain other exclusions, to create digital games for all platforms, such as mobile devices, gaming consoles and personal computers, based on a number of the Company's intellectual properties, including MONOPOLY, SCRABBLE, YAHTZEE, and BOGGLE. Similarly, the Company has an agreement with Activision under which Activision offers digital games based on the TRANSFORMERS brand, as well as with other third party digital gaming companies such as DeNA and GameLoft. The Company continues to seek and develop additional outlets for its brands in digital gaming, including casual, mobile and online gaming.

The Company also seeks to express its brands through its lifestyle licensing business. Under its lifestyle licensing programs, the Company enters into relationships with a broad spectrum of apparel, food, bedding and

other lifestyle products companies for the global marketing and distribution of licensed products based on the Company's brands. These relationships further broaden and amplify the consumer's ability to experience the Company's brands.

As the Company seeks to grow its business in entertainment, licensing and digital gaming, the Company will continue to evaluate strategic alliances and acquisitions which may complement its current product offerings, allow it entry into an area which is adjacent to or complementary to the toy and game business, or allow it to further develop awareness of its brands and expand the ability of consumers to experience its brands in different forms and formats.

During 2011, the Company established Hasbro's Gaming Center of Excellence in Rhode Island to centralize games marketing and development while building on Hasbro's strategy of re-imagining, re-inventing and re-igniting core brands as well as inventing new brands.

During the first quarter of 2012 the Company took certain measures to strengthen its organization and right size certain businesses and functions, resulting in employee termination and recognition of severance costs of approximately $11,100.

During the fourth quarter of 2012 the Company announced a plan in which it expects to generate annual cost savings of $100,000 by 2015. This plan includes an approximate 10% workforce reduction, facility consolidations and process improvements which reduce redundancy and increase efficiencies. Other cost savings initiatives include focus on fewer, larger global brands and a reduction in the number of SKUs. During the fourth quarter of 2012, the Company incurred expenses of approximately $36,100 related to this plan. The Company expects to incur additional charges through 2013 as additional components of the plan are implemented.

The Company's business is highly seasonal with a significant amount of revenues occurring in the second half of the year. In 2012, 2011 and 2010, the second half of the year accounted for 64%, 63% and 65% of the Company's net revenues, respectively.

The Company sells its products both within the United States and in a number of international markets. In recent years, the Company's international net revenues have experienced growth as the Company has sought to increase its international presence. One of the ways the Company has driven international growth is by opening offices in certain markets to develop a greater presence. Since 2006, the Company has opened up operations in new markets around the world including China, Brazil, Russia, Korea, Czech Republic, Peru and Colombia. These represent emerging markets where the Company believes that it can achieve higher revenue growth than it could achieve in more mature markets. Net revenues in emerging markets increased by 16% in 2012 compared to 2011 and represented more than 10% of consolidated net revenues in 2012. Net revenues of the Company's International segment represented 44%, 43% and 39% of total net revenues in 2012, 2011 and 2010, respectively.

The Company's business is separated into three principal business segments, U.S. and Canada, International and Entertainment and Licensing. The U.S. and Canada segment develops, markets and sells both toy and game products in the United States and Canada. The International segment consists of the Company's European, Asia Pacific and Latin and South American toy and game marketing and sales operations. The Company's Entertainment and Licensing segment includes the Company's lifestyle licensing, digital gaming, movie, television and online entertainment operations. In addition to these three primary segments, the Company's world-wide manufacturing and product sourcing operations are managed through its Global Operations segment.

The Company is committed to returning excess cash to its shareholders through share repurchases and dividends. As part of this initiative, from 2005 through 2011, the Company's Board of Directors (the "Board") adopted six successive share repurchase authorizations with a cumulative authorized repurchase amount of $2,825,000. The sixth authorization was approved in May 2011 for $500,000. At December 30, 2012, the Company had $127,282 remaining available under this authorization. During the three years ended 2012, the Company spent a total of $1,159,730, to repurchase 28,918 shares in the open market. The Company intends to, at its discretion, opportunistically repurchase shares in the future subject to market conditions, the Company's other potential uses of cash and the Company's levels of cash generation. In addition to the share repurchase program, the Company also seeks to return excess cash through the payment of quarterly dividends. In February

2013 the Company's Board increased the Company's quarterly dividend rate, effective for the dividend payment in May 2013, to $0.40 per share, an 11% increase from the prior year quarterly dividend of $0.36 per share. This was the ninth dividend increase in the previous 10 years. During that period, the Company has increased its quarterly cash dividend from $0.03 to $0.40 per share.

Summary

The components of the results of operations, stated as a percent of net
revenues, are illustrated below for the three fiscal years ended December 30,
2012.



                                                  2012         2011         2010
      Net revenues                                 100.0 %      100.0 %      100.0 %
      Costs and expenses:
      Cost of sales                                 40.9         42.8         42.2
      Royalties                                      7.4          7.9          6.2
      Product development                            4.9          4.6          5.0
      Advertising                                   10.3          9.7         10.5
      Amortization of intangibles                    1.3          1.1          1.3
      Program production cost amortization           1.0          0.8          0.6
      Selling, distribution and administration      20.7         19.2         19.5

      Operating profit                              13.5         13.9         14.7
      Interest expense                               2.2          2.1          2.1
      Interest income                               (0.1 )       (0.2 )       (0.1 )
      Other (income) expense, net                    0.3          0.6          0.1

      Earnings before income taxes                  11.1         11.4         12.6
      Income taxes                                   2.9          2.4          2.7

      Net earnings                                   8.2 %        9.0 %        9.9 %

Results of Operations

The fiscal year ended December 30, 2012 was a fifty-three week period while each of the fiscal years in the two-year period ended December 25, 2011 were fifty-two week periods.

Net earnings for the fiscal year ended December 30, 2012 were $335,999, or $2.55 per diluted share. This compares to net earnings for fiscal 2011 and 2010 of $385,367, or $2.82 per diluted share and $397,752, or $2.74 per diluted share, respectively.

Net earnings for 2012 includes a $0.26 per diluted share unfavorable impact resulting from restructuring costs associated with the cost savings initiatives announced during the first and fourth quarters of 2012. Net earnings for 2011 includes a $0.07 per diluted share unfavorable impact resulting from costs associated with the reorganization of the Company's games business announced during the second quarter of 2011 related to the establishment of the Gaming Center of Excellence. Substantially all of the restructuring charges in 2012 and 2011 are included in Corporate and Eliminations in the Company's segment reporting. Net earnings for both 2011 and 2010 include a $0.15 per diluted share favorable tax benefit resulting from the settlement of tax examinations.

Consolidated net revenues for the year ended December 30, 2012 were $4,088,983 compared to $4,285,589 in 2011 and $4,002,161 in 2010. Most of the Company's net revenues and operating profits were derived from its three principal segments:
the U.S. and Canada segment, the International segment and the Entertainment and Licensing segment, which are discussed in detail below. Consolidated net revenues in 2012 and 2011 were impacted by foreign currency translation of approximately $(98,500) and $64,300, respectively. The following table presents net revenues by product category for the years ended December 30, 2012 and December 25, 2011.

                                       %                              %
                       2012          Change           2011          Change           2010
     Boys           $ 1,577,010          (13 )%      1,821,544           35 %       1,345,523
     Games            1,192,090            2 %       1,169,672          (10 )%      1,293,772
     Girls              792,292            7 %         741,394          (11 )%        830,383
     Preschool          527,591           (5 )%        552,979            4 %         532,483

     Net Revenues   $ 4,088,983                      4,285,589                      4,002,161

For the year ended December 30, 2012, decreased net revenues in the boys and preschool categories were partially offset by increases in the girls and games categories. For the year ended December 25, 2011, decreased net revenues in the girls and games categories were more than offset by increases in the boys and preschool categories.

BOYS: Net revenues in the boys category decreased 13% in 2012 compared to 2011 as a result of lower net revenues from TRANSFORMERS and BEYBLADE products, which were partially offset by higher sales of MARVEL products, primarily due to sales of products based on the theatrical releases of MARVEL'S THE AVENGERS in May 2012 and THE AMAZING SPIDER-MAN in July 2012. In 2011, net revenues in the boys category grew 35% compared to 2010, primarily due to higher net revenues from TRANSFORMERS, BEYBLADE and KRE-O products. In 2011, TRANSFORMERS net revenues were positively impacted by the theatrical release of TRANSFORMERS: DARK OF THE MOON in June 2011. Also, 2011 marked the first full year of sales of BEYBLADE products, which were re-introduced during the second half of 2010, and the introduction of KRE-O products during the second half of 2011.

GAMES: Net revenues in the games category increased 2% in 2012 compared to 2011 as a result of higher net revenues from MAGIC: THE GATHERING, BATTLESHIP and TWISTER, as well as the introduction of boys' action gaming products, which included STAR WARS FIGHTER PODS, ANGRY BIRDS STAR WARS and TRANSFORMERS BOT SHOTS. These higher revenues were partially offset by lower net revenues from other game brands, including SCRABBLE, CONNECT 4 and YAHTZEE. In 2011, net revenues in the games category decreased 10% compared to 2010 as a result of lower net revenues from board games partially offset by increased net revenues from MAGIC: THE GATHERING products.

GIRLS: Net revenues in the girls category increased 7% in 2012 compared to 2011 primarily due to new initiatives including the introduction of FURBY and ONE DIRECTION products. Higher net revenues from MY LITTLE PONY products, which are supported by television programming, also contributed to growth in the girls category. These higher net revenues were partially offset by decreased net revenues from LITTLEST PET SHOP, FURREAL FRIENDS and STRAWBERRY SHORTCAKE products. In 2011, net revenues in the girls category decreased 11% compared to 2010 primarily due to lower net revenues from LITTLEST PET SHOP products partially offset by increased net revenues from BABY ALIVE and MY LITTLE PONY products.

PRESCHOOL: Net revenues in the preschool category decreased 5% in 2012 compared to 2011. Increased net revenues from PLAY-DOH and PLAYSKOOL HEROES products, which includes MARVEL products, STAR WARS products and TRANSFORMERS RESCUE BOTS, were more than offset by declines in SESAME STREET and TONKA products. In 2011, the preschool category benefited from the introduction of new products under the Company's license with Sesame Workshop as well as PLAYSKOOL HEROES products which contributed to overall growth of 4% compared to 2010. These increases were partially offset by decreased net revenues from PLAYSKOOL, TONKA and PLAY-DOH products.

The following table presents net revenues and operating profit data for the Company's three principal segments for 2012, 2011 and 2010.

                                                     %                                  %
                                   2012            Change             2011            Change             2010
Net Revenues
U.S. and Canada                 $ 2,116,297             (6 )%      $ 2,253,458             (2 )%      $ 2,299,547
International                   $ 1,782,119             (4 )%      $ 1,861,901             19 %       $ 1,559,927
Entertainment and Licensing     $   181,430             12 %       $   162,233             19 %       $   136,488

Operating Profit
U.S. and Canada                 $   319,072             15 %       $   278,356            (20 )%      $   349,594
International                   $   215,489            (20 )%      $   270,578             29 %       $   209,704
Entertainment and Licensing     $    53,191             24 %       $    42,784             (1 )%      $    43,234

U.S. and Canada

U.S. and Canada segment net revenues for the year ended December 30, 2012 decreased 6% in 2012 compared to 2011 while net revenues for the year ended December 25, 2011 decreased 2% in 2011 compared to 2010. The impact of currency translation was not material in either period. In 2012, lower net revenues from boys and preschool products partially offset by higher net revenues from girls and games products contributed to the segment's decline while lower net revenues from girls and games products partially offset by higher net revenues from boys and preschool products contributed to the segment's decline in 2011 compared to 2010. The Company's expectation in 2012 was that a higher portion of U.S. and Canada segment net revenues would shift to the second half of the year as part of a strategy to more closely align shipments with consumer demand. However, the challenging retail environment in the United States during the holiday season resulted in the segment not realizing the level of shipments in the later part of the fourth quarter that had been anticipated which contributed to the overall 6% decline in net revenues in the segment.

In 2012, higher net revenues from MY LITTLE PONY and EASY BAKE products as well as the introduction of FURBY and ONE DIRECTION products contributed to growth in the girls category. These increases were partially offset by lower net revenues from FURREAL FRIENDS, STRAWBERRY SHORTCAKE, LITTLEST PET SHOP and BABY ALIVE products in 2012. In 2011, moderately higher net revenues from MY LITTLE PONY and BABY ALIVE products compared to 2010 were more than offset by lower net revenues from FURREAL FRIENDS and LITTLEST PET SHOP products.

In the games category, higher net revenues from MAGIC: THE GATHERING, TWISTER, BATTLESHIP and boys' action gaming products, primarily STAR WARS and TRANSFORMERS products, in 2012 were partially offset by lower net revenues from other game brands. Similarly, in 2011, higher net revenues from MAGIC: THE GATHERING products compared to 2010 were more than offset by lower net revenues from board games.

In the boys category, higher sales of MARVEL products, particularly movie-related products related to THE AVENGERS and SPIDER-MAN, in 2012 compared to 2011 were more than offset by lower net revenues from TRANSFORMERS, STAR WARS, BEYBLADE and NERF products. In 2011, higher net revenues from TRANSFORMERS, particularly movie-related products, compared to 2010 as well as higher sales of BEYBLADE products and the introduction of KRE-O products were partially offset by lower net revenues from NERF and to a lesser extent STAR WARS and TONKA products.

Increased net revenues from PLAYSKOOL HEROES, primarily MARVEL-related, and to a lesser extent higher net revenues from PLAY-DOH products were more than offset by decreased sales of SESAME STREET and TONKA products. In 2011, higher net revenues from SESAME STREET, TRANSFORMERS and STAR WARS products compared to 2010 were partially offset by lower net revenues from PLAYSKOOL, TONKA and PLAY-DOH products.

U.S. and Canada operating profit increased 15% in 2012 compared to 2011 and decreased 20% in 2011 compared to 2010. Operating profit margin improved to 15.1% in 2012 compared to 12.4% in 2011. The increase in operating profit and margin was primarily the result of product mix as well as improved inventory management, which resulted in lower inventory obsolescence costs in 2012 compared to 2011. Changes in product mix included less impact from closeout sales in 2012 compared to 2011. U.S. and Canada operating profit decreased by 20% in 2011 compared to 2010. The operating profit margin in 2011 decreased to 12.4% of net revenues compared to 15.2% in 2010. The decline in operating profit and margin in 2011 compared to 2010 was primarily the result of the decline in net revenues in 2011; product mix, including lower revenues from games and higher revenues from entertainment-based products; and the impact of closeout sales. Foreign currency translation did not have a material impact on U.S. and Canada operating profit in 2012 or 2011.

International

International segment net revenues for the year ended December 30, 2012 decreased 4% compared to 2011 while net revenues for the year ended December 25, 2011 increased 19% compared to 2010. In 2012, net revenues were negatively impacted by currency translation of approximately $98,000 as a result of a stronger U.S. dollar whereas net revenues in 2011 were positively impacted by . . .