Deborah M. Thomas
Executive Vice President and Chief Financial Officer at Hasbro
Good, morning, everyone. The third quarter results reflect the timing shifts we forecasted since early in the year. These include release timing for MAGIC: THE GATHERING card set, entertainment deliveries and several product launches in key brands happening in early fourth quarter as well as the shift in retail promotional period. Foreign exchange has negatively impacted revenue by $104 million year-to-date with $54 million of that impact in the third quarter. And as we have projected the macro environment for the consumer has been challenging, increasingly so as the year has progressed.
As we shared earlier this month, we set an aggressive and achievable plan to drive profitable growth over both the near and long-term. We're focusing on fewer brands where we see the biggest potential. Essential in the delivery of this plan is an operational excellence program to deliver USD250 million to USD300 million in annualized run rate cost savings by year-end 2025. We recorded a $55.3 million charge this quarter associated with the implementation of this program, primarily from the impairment of assets from non-core businesses we're exiting within the Entertainment segment as well as severance and employee-related costs.
We continue to believe we can deliver 16% adjusted operating profit margin for this year. This reflects the favorable mix of revenue and leaning into above-average margin businesses like Wizards and Digital Gaming including the continued activation of D&D Beyond, which is expected to be earnings-accretive in Q4. We coupled this with a heightened focus on bottom line discipline including the operational excellence savings we're driving across our business. Our balance sheet remains strong and is well positioned to meet demand in the fourth quarter. Our early commitment to inventories impacted our cash generation in the near term. The quarter-end cash balance was $551.6 million compared to $1.2 billion in last year's third quarter with operating cash flows year-to-date of $262.2 million.
Cash is at a lower than historical level and this is typically the low-point in our cash balances during the year. We expect a lower cash balance this year end than 2021 as we have returned $125 million to shareholders through share repurchase, paid $289 million in dividends thus far, bolstered our digital strategy with the $146 million acquisition of D&D Beyond and repaid $73 million of long-term debt. Incremental year-over-year promotional activity is occurring behind our key holiday toy and game items to drive our newest innovation, while also reducing inventory on hand at Hasbro and at retail. Overall, our inventory continues to be as high-quality but our goal is to work down the balance by year end, and you'll see that in our outlook and results.
While cash at year end is projected to be below historical levels, our go-forward plan accelerates our cash generation with the high-end target of $1 billion in operating cash flow next year increasing annually off that level as we move forward toward our 2027 targets. We remain committed to delevering our balance sheet maintaining our investment-grade rating and are on-track to meet our debt-to-EBITDA target of 2 to 2.5 times next year. We continue to return cash to you, our shareholders, through our dividend program and anticipate increasing share repurchase in future years.
Looking more closely at the quarter, operating profit declined in dollars and as a percentage of revenue from the same period last year. This primarily reflects lower gross margin on lower revenue. This is largely in our consumer products business, which incurred a greater amount of sales allowances in the third quarter of this year versus last, lowering net revenues and higher product cost. Additionally, we increased provisions on some slower-moving inventory in certain markets. The impact of foreign-exchange had a pass-through effect of negative 3% on gross margin due to translation. These factors are reflected in a 380 basis-point increase in cost-of-sales to revenue that was partially offset by lower program amortization on lower entertainment deliveries. Lower entertainment deliveries in the quarter also resulted in lower royalties.
Product development increases reflect investment in key talent, particularly within Wizards of the Coast and Digital Gaming. Advertising was down versus Q3 of last year, which included spend behind the My Little Pony movie and we shifted our consumer product advertising spend closer to the holiday and closer to retailers' planned promotional periods.
Adjusted intangible amortization increased reflecting the D&D Beyond acquisition. This added $1.7 million in the quarter and is forecasted to be $7.5 million next year. SG&A dollars declined in the quarter on an adjusted basis, but increased as a percentage of revenue. Below operating profit, non-operating income was $13.2 million, up from an expense of $1.2 million last year. This was primarily the result of a favorable net gain on foreign exchange which we do not expect to repeat in Q4. Last year's third quarter, we had a $9.1 million cost from the early repayment of debt. The underlying adjusted tax rate excluding discrete items was 19.9% versus 23.4% last year. And we expect the full-year underlying rate in a range of 20.5% to 21.5%.
Looking at our segments, Wizards of the Coast and Digital Gaming revenues declined 13% in constant currency. Tabletop revenues declined 9% as a result of release timing, but are up 5% through the first nine months of the year. As Cynthia said earlier this month, we're forecasting double-digit growth for MAGIC: THE GATHERING this year led by strong growth in Tabletop. Digital and licensed gaming declined 37% based on release timing and reflecting the difficult comparison with the launch of the premium game Dark Alliance and the tail-end of the launch impact from MAGIC: THE GATHERING Arena mobile last year. We continued to invest in digital gaming initiatives and talent to support long-term growth in this segment.
Operating profit of $102.2 million was down 36%. This reflects the revenue decline, higher cost in paper and freight and incremental royalty expense with new Universes Beyond sets like Warhammer 40K. We've also added the amortization of D&D Beyond, I spoke to earlier. These costs were partially offset by lower launch related product development, advertising and depreciation associated with Dark Alliance that released in 2021. For the full year, on a constant currency basis, we expect high single-digit revenue growth with operating profit margin over 40%, down from 42.5% for full-year 2021 as we continue investing for long-term growth in these valuable brands.
Consumer product segment revenues decreased 6% excluding a negative $40 million impact of foreign-exchange, $31.1 million of which was in Europe. Latin America grew 15% and Asia-Pacific was up 10%, but this growth was more than offset by a 14% decline in North America and an 11% decline in the European region, which was flat, absent foreign exchange. As a reminder, for the full-year 2021, our revenue in Russia was a $115 million with approximately 70% earned in the second half of the year. We do not have this revenue and associated operating profit in 2022. The segment's 31% decline in adjusted operating profit is the result of lower revenue, higher allowances, price adjustments related to closeouts and obsolescence expense associated with moving higher inventory levels. For the full year, revenue is expected to decline low-single digits for full-year 2021 in constant-currency with operating profit margin down slightly from 2021's 10.1%.
From a brand perspective, each brand portfolio category in the segment, franchise brands, partner brands, Hasbro Gaming and emerging brands declined in the quarter. Key growth franchises PEPPA PIG and Play-Doh were up growing revenue and point-of-sale. My Little Pony consumer product revenue and POS grew a year after the movie debuted. Hasbro products from Marvel and Star Wars positively contributed to revenue and POS in the quarter. Where we've had our most challenging comps are NERF and Hasbro gaming, two important areas where we have long-term growth plans. Chris spoke to several important new initiatives in these brands for the holiday and the team shared longer-term plans earlier this month at our Investor Day.
Entertainment segment revenues reflected the anticipated timing of deliveries and were down 34% in constant currency. Film and TV revenue declined 26%. Last year, we released films Come from Away and Finch direct to streaming and did not have any comparable films this year. Also, Yellowjackets is later this year versus last. Family brands revenue declined 78% primarily due to the delivery of My Little Pony: A New Generation in the third quarter 2021, which did not have a comparable film release this year. We have significant fourth quarter entertainment revenue for scripted TV including The Rookie, The Rookie: Feds, Yellowjacket, and Cruel Summer and the launch of Transformers: EarthSpark on Nickelodeon and Paramount Plus as well as continued animation from My Little Pony, PEPPA PIG, and PJ Masks.
Adjusted operating profit decreased 86% on the lower revenues and the mix of content. This was partially offset by reductions in program amortization expense, lower advertising versus the My Little Pony movie release and lower royalty expense. For the full year, on a constant currency basis and excluding music, we expect revenue to decline in the mid single-digits as we divest of certain non-core businesses and certain deliveries of scripted TV and film releases moved to the first quarter of 2023. Adjusted operating profit is expected to be in-line with or slightly up from last year's adjusted operating profit margin absent music of 7.8%.
In closing, we're focused on driving our business in the fourth quarter to meet consumer demand, end the year with clean inventories and to achieve our run rate cost savings. We expect full-year revenue to be flat-to-down slightly in constant currency and to expand adjusted operating profit margin by 50 basis points to 16%. This also sets us up for growth we're planning in 2023 and beyond. We have a plan that builds on our strengths in branded entertainment and gaming and in our direct-to-consumer relationships. We have the brands, the team and the strategy to successfully execute this plan. I'll now turn it back to Chris.
