Hasbro 2006 Annual Report Download - page 63

A summary of the Company’s other intangibles, net at December 31, 2006 and December 25, 2005 is as
follows:
2006 2005
Acquired product rights ....................................... $903,182 900,891
Licensed rights of entertainment properties ......................... 211,555 219,071
Accumulated amortization...................................... (658,218) (586,022)
Amortizable intangible assets . . ................................. 456,519 533,940
Product rights with indefinite lives ............................... 75,738 75,738
Unrecognized pension prior service cost ........................... — 3,755
$ 532,257 613,433
On September 9, 2005, the Company purchased the assets and assumed certain liabilities of Wrebbit Inc.,
a Montreal-based creator and manufacturer of innovative puzzles. The purchase price was approximately
$14,200. Based on the allocation of the purchase price, property rights related to acquired product lines of
approximately $10,900 were recorded in connection with this acquisition. These property rights are being
amortized over a ten year life. No goodwill was recorded as a result of this acquisition.
During June 2005, the Company reacquired the digital gaming rights for all its owned or controlled
properties from Infogrames Entertainment SA (Infogrames) for $65,000. These rights were previously held by
Infogrames on an exclusive basis as a result of a license agreement entered into during 2000 with an expiration
date in 2016. The consideration paid to reacquire these rights, which represents fair value, is included as a
component of acquired product rights and is being amortized over a 10-year period. In addition, the Company
and Infogrames entered into a new licensing agreement that provides Infogrames exclusive rights to
DUNGEONS & DRAGONS and rights to nine other properties for a limited number of platforms. Under the
new license agreement, the Company will receive royalty income on Infogrames sales.
The Company will continue to incur amortization expense related to the use of acquired and licensed
rights to produce various products. The amortization of these product rights will fluctuate depending on related
projected revenues during an annual period, as well as rights reaching the end of their useful lives. The
Company currently estimates continuing amortization expense for the next five years to be approximately:
2007 ................................................................ $66,400
2008 ................................................................ 67,400
2009 ................................................................ 62,500
2010 ................................................................ 36,000
2011 ................................................................ 34,200
(5) Financing Arrangements
Short-Term Borrowings
At December 31, 2006, Hasbro had available an unsecured committed line and unsecured uncommitted
lines of credit from various banks approximating $300,000 and $203,600, respectively. A significant portion of
the short-term borrowings outstanding at the end of 2006 and 2005 represents borrowings made under, or
supported by, these lines of credit. The weighted average interest rates of the outstanding borrowings as of
December 31, 2006 and December 25, 2005 were 4.7% and 4.2%, respectively. The Company had no
borrowings outstanding under its committed line of credit at December 31, 2006. During 2006, Hasbro’s
working capital needs were fulfilled by cash generated from operations, the Company’s accounts receivable
52
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)