Hasbro 2010 Annual Report Download - page 49

Contractual Obligations and Commercial Commitments
In the normal course of its business, the Company enters into contracts related to obtaining rights to
produce product under license, which may require the payment of minimum guarantees, as well as contracts
related to the leasing of facilities and equipment. In addition, the Company has $1,384,895 in principal amount
of long-term debt outstanding at December 26, 2010. Future payments required under these and other
obligations as of December 26, 2010 are as follows:
Certain Contractual Obligations 2011 2012 2013 2014 2015 Thereafter Total
Payments due by Fiscal Year
Long-term debt............... $ — — — 425,000 — 959,895 1,384,895
Interest payments on long-term
debt ..................... 87,084 87,084 87,084 74,069 61,053 916,265 1,312,639
Operating lease commitments .... 28,200 24,261 20,966 10,040 6,911 8,549 98,927
Future minimum guaranteed
contractual payments......... 39,513 46,353 85,675 14,775 14,375 86,250 286,941
Tax sharing agreement ......... 6,000 6,400 6,800 7,100 7,400 101,900 135,600
Purchase commitments ......... 340,007 — — — — — 340,007
$500,804 164,098 200,525 530,984 89,739 2,072,859 3,559,009
The Company has a liability at December 26, 2010, including potential interest and penalties, of
$105,575 for uncertain tax positions that have been taken or are expected to be taken in various income tax
returns. The Company does not know the ultimate resolution of these uncertain tax positions and as such, does
not know the ultimate timing of payments related to this liability. Accordingly, these amounts are not included
in the table above.
In connection with the Company’s agreement to form a joint venture with Discovery, the Company is
obligated to make future payments to Discovery under a tax sharing agreement. These payments are contingent
upon the Company having sufficient taxable income to realize the expected tax deductions of certain amounts
related to the joint venture. Accordingly, estimates of these amounts are included in the table above.
The Company’s agreement with Marvel provides for minimum guaranteed royalty payments and requires
the Company to make minimum expenditures on marketing and promotional activities. The future minimum
contractual payments in the table above include future guaranteed contractual royalty payments of approxi-
mately $19,000 payable to Marvel that are contingent upon the theatrical release of SPIDER-MAN 4 which the
Company currently expects to be paid in 2012 and may be reduced by payments occurring prior to the
theatrical release of SPIDER-MAN 4. In addition, in connection with the extension of the Marvel license in
2009, the Company may be subject to additional royalty guarantees totaling $140,000 that are not included in
the table above and that may be payable during the next five to six years contingent upon the quantity and
types of theatrical movie releases.
In addition to the amounts included in the table above, the Company expects to make contributions
totaling approximately $5,400 related to its unfunded U.S. and other International pension plans in 2011. The
Company also has letters of credit and related instruments of approximately $179,592 at December 26, 2010.
The Company believes that cash from operations and funds available through its commercial paper
program or lines of credit will allow the Company to meet these and other obligations described above.
Financial Risk Management
The Company is exposed to market risks attributable to fluctuations in foreign currency exchange rates
primarily as the result of sourcing products priced in U.S. dollars, Hong Kong dollars and Euros while
marketing those products in more than twenty currencies. Results of operations may be affected primarily by
changes in the value of the U.S. dollar, Hong Kong dollar, Euro, British pound, Canadian dollar and Mexican
peso and, to a lesser extent, currencies in Latin American and Asia Pacific countries.
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