Hasbro 2010 Annual Report Download - page 38

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
which 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. The increased net revenues discussed above were
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.
Entertainment and Licensing
The Entertainment and Licensing segment’s net revenues for the year ended December 26, 2010
decreased 12% to $136,488 from $155,013 for the year ended December 27, 2009. The decrease was primarily
due to decreases in both lifestyle and digital gaming licensing revenues, primarily relating to lower licensing
revenues from TRANSFORMERS and, to a lesser extent, G.I. JOE, products following the motion picture
releases in 2009.
Entertainment and Licensing segment operating profit decreased 34% to $43,234 in 2010 from $65,572 in
2009. Operating profit decreased as a result of the decreased revenues discussed above and program production
amortization costs associated with our television shows. This was partially offset by lower selling, distribution
and administrative expenses. Selling, distribution and administrative expenses in 2009 were negatively
impacted by approximately $7,200 in transaction costs related to the Company’s investment in the joint
venture with Discovery.
While the Discovery joint venture is a component of our television operations, the Company’s 50% share
in the earnings from the joint venture are included in other (income) expense and therefore are not a
component of operating profit of the segment.
The Entertainment and Licensing segment’s net revenues for the year ended December 27, 2009 increased
44% to $155,013 from $107,929 for the year ended December 28, 2008. The increase was primarily due to
higher lifestyle and digital gaming licensing revenues, primarily relating to TRANSFORMERS and G.I. JOE
licensed products.
Entertainment and Licensing segment operating profit increased 28% to $65,572 in 2009 from $51,035 in
2008. Operating profit increased as a result of the higher revenues discussed above, partially offset by
increased selling, distribution and administrative expenses which included approximately $7,200 in transaction
costs related to the Company’s investment in the joint venture with Discovery, start-up costs associated with
the Company’s television studio, as well as increased intangible amortization and royalty expense.
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