Hasbro 2008 Annual Report Download - page 82

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The Company enters into license agreements with inventors, designers and others for the use of
intellectual properties in its products. Certain of these agreements contain provisions for the payment of
guaranteed or minimum royalty amounts. Additionally, the Company has a long-term commitment related to
promotional and marketing activities at a U.S. based theme park. Under terms of existing agreements as of
December 28, 2008, Hasbro may, provided the other party meets their contractual commitment, be required to
pay amounts as follows: 2009: $16,041; 2010: $5,605; and 2011: $36,172. Subsequent to December 28, 2008,
the Company entered into an agreement with Marvel Characters B.V. (“Marvel”) that resulted in the extension
of the current agreement from the end of 2011 through the end of 2017. The extended agreement includes an
additional $100,000 in minimum guaranteed royalties, with the potential for up to an additional $140,000 in
guaranteed royalties contingent upon the release by Marvel of certain MARVEL character-based theatrical
releases that meet certain defined criteria.
In addition to the above commitments, certain of the above contracts impose minimum marketing
commitments on the Company.
At December 28, 2008, the Company had approximately $227,673 in outstanding purchase commitments.
Hasbro is party to certain legal proceedings, none of which, individually or in the aggregate, is deemed to
be material to the financial condition or results of operations of the Company.
(16) Segment Reporting
Segment and Geographic Information
Hasbro is a worldwide leader in children’s and family leisure time products and services, including toys,
games and licensed products ranging from traditional to high-tech and digital. At the beginning of 2008, the
Company reorganized the reporting structure of its operating segments and moved its Mexican operations,
previously managed and reported in the North American segment, to the International segment. As a result,
the North American segment has been renamed the U.S. and Canada segment. The management reorganization
was the result of a realignment of the Company’s commercial markets and reflects its objective to leverage its
Mexican operations in connection with its growth strategy in Latin and South America. In 2008 the Company’s
segments include U.S. and Canada, International, Global Operations and Other. Segment data for 2007 and
2006 has been reclassified to reflect the 2008 segment structure.
The U.S. and Canada segment includes the development, marketing and selling of boys’ action figures,
vehicles and playsets, girls’ toys, electronic toys and games, plush products, preschool toys and infant
products, electronic interactive products, toy-related specialty products, traditional board games and puzzles,
DVD-based games and trading card and role-playing games within the United States and Canada. Within the
International segment, the Company develops, markets and sells both toy and certain game products in markets
outside of the U.S. and Canada, primarily the European, Asia Pacific, and Latin and South American regions.
The Global Operations segment is responsible for manufacturing and sourcing finished product for the
Company’s U.S. and Canada and International segments. The Company’s Other segment licenses out the rights
to certain of its toy and game properties in connection with the sale of non-competing toys and games and
non-toy products, as well as consumer promotions.
Segment performance is measured at the operating profit level. Included in Corporate and eliminations
are certain corporate expenses, the elimination of intersegment transactions and certain assets benefiting more
than one segment. Intersegment sales and transfers are reflected in management reports at amounts
approximating cost. Certain shared costs, including global development and marketing expenses, are allocated
to segments based upon foreign exchange rates fixed at the beginning of the year, with adjustments to actual
foreign exchange rates included in Corporate and eliminations. The accounting policies of the segments are
the same as those referenced in note 1.
72
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)