Hasbro 2009 Annual Report Download - page 37

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the games and puzzles category as a result of increased sales of DUEL MASTERS and TRIVIAL PURSUIT
games and the impact of the acquisition of Cranium, partially offset by decreased revenues from plug and play
games, as well as increased sales of products in the preschool category. Revenues from the girls’ toys category
decreased primarily as a result of decreased sales of I-DOG, and to a lesser extent, decreased revenues from
MY LITTLE PONY, FURREAL FRIENDS, and LITTLEST PET SHOP. Although revenues from LITTLEST
PET SHOP decreased slightly in 2008, sales of these products remained a significant contributor to U.S. and
Canada segment net revenues in 2008. Decreases in girls’ toys net revenues were partially offset by increased
sales as a result of the reintroduction of EASY-BAKE oven. Revenues in 2008 were also negatively impacted
by decreased sales of TOOTH TUNES and POWER TOUR GUITAR, which are no longer in the Company’s
product line.
U.S. and Canada operating profit decreased to $283,152 in 2008 from $287,800 in 2007. Operating profit
in 2008 was negatively impacted by approximately $1,100 due to the translation of foreign currencies to the
U.S. dollar. U.S. and Canada segment gross profits increased in dollars but decreased as a percentage of net
revenues in 2008 primarily as a result of the increased promotional programs implemented by the Company in
the fourth quarter of 2008, including the provision of sales allowances and markdowns, to address the weak
retail environment. The increase in gross profit in dollars was more than offset by increased product
development and sales and marketing expenses related to investments the Company made in both core brands
and its digital initiative related to its Wizards of the Coast subsidiary; increased amortization as a result of the
acquisition of Cranium and the purchase of intellectual property rights related to TRIVIAL PURSUIT;
increased royalty expense; and increased shipping and distribution costs, reflecting higher sales volume and
higher transportation costs.
International
International segment net revenues for the year ended December 27, 2009 decreased by 3% to $1,459,476
from $1,499,334 in 2008. In 2009, net revenues were negatively impacted by currency translation of
approximately $64,500 as a result of a stronger U.S. dollar. Excluding the unfavorable impact of foreign
exchange, International segment net revenues increased 2% in local currency in 2009. The increase in local
currency net revenues was driven by increased sales in the boys’ toys category, primarily as a result of
increased sales of TRANSFORMERS and G.I. JOE products, as well as increased sales of NERF products.
Increases in boys’ toys net revenues were partially offset by lower revenues from MARVEL, ACTION MAN,
INDIANA JONES and STAR WARS products. Net revenues in the girls’ toys category decreased primarily as
a result of decreased sales of MY LITTLE PONY and FURREAL FRIENDS products, partially offset by
increased sales of LITTLEST PET SHOP products and sales of STRAWBERRY SHORTCAKE products,
which were reintroduced to the Company’s line in the second quarter of 2009. Net revenues in the preschool
category decreased primarily as a result of decreased revenues from sales of IN THE NIGHT GARDEN and
PLAYSKOOL products, partially offset by increased revenues from sales of PLAY-DOH products. Net
revenues in the games and puzzles category decreased slightly as a result of decreased sales of board games.
Net revenues in 2009 were also negatively impacted by decreased sales of TOOTH TUNES products, which
have been discontinued in the Company’s product line.
International segment operating profit decreased 2% to $162,159 in 2009 from $165,186 in 2008.
Operating profit for the International segment in 2009 was positively impacted by approximately $9,500 due
to the translation of foreign currencies to the U.S. dollar. Increased local currency gross profit in 2009 as a
result of the increased net revenues discussed above was more than offset by increased operating expenses,
including the impact of our investments in opening offices in emerging international markets. In addition,
International segment operating profit in 2008 was positively impacted by the recognition of a pension surplus
in the United Kingdom of approximately $6,000.
International segment net revenues for the year ended December 28, 2008 increased by 4% to $1,499,334
from $1,444,863 in 2007. In 2008 net revenues were negatively impacted by currency translation of
approximately $7,400 as a result of a stronger U.S. dollar. The increase in net revenues was primarily the
result of increased product sales in the girls’ toys and preschool categories primarily relating to LITTLEST
PET SHOP in the girls’ toys category and IN THE NIGHT GARDEN and PLAYSKOOL products in the
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