Hasbro 2010 Annual Report Download - page 66

A summary of the Company’s other intangibles, net at December 26, 2010 and December 27, 2009 is as
follows:
2010 2009
Acquired product rights ................................. $755,214 1,099,541
Licensed rights of entertainment properties ................... 256,555 256,555
Accumulated amortization ............................... (586,910) (877,267)
Amortizable intangible assets ............................. 424,859 478,829
Product rights with indefinite lives ......................... 75,738 75,738
$ 500,597 554,567
In May 2009 the Company amended its license agreement with Lucas Licensing, Ltd. (“Lucas”) related
to the STAR WARS brand. The amendment included the extension of the term of the license for an additional
two years, from the end of 2018 to the end of 2020. In connection with the extension of the license rights,
$45,000 was recorded as an intangible asset during 2009 and will be amortized over the term of the extension.
The amendment also provided for the settlement of certain royalty audit issues, primarily related to contractual
interpretations associated with the computation of royalties dating back to 1999, and the clarification of certain
terms and interpretations of the agreement on a prospective basis through the end of the term, including the
scope of licensed rights to future developed properties by Lucas.
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 related to the above intangible assets for the
next five years to be approximately:
2011 ................................................................ $45,000
2012 ................................................................ 50,000
2013 ................................................................ 51,000
2014 ................................................................ 50,000
2015 ................................................................ 47,000
(5) Equity Method Investment
In the second quarter of 2009, the Company acquired a 50% interest in a joint venture, Hub Television
Networks, LLC (“THE HUB”, formerly known as DHJV Company LLC), with Discovery Communications,
Inc. (“Discovery”). THE HUB, formerly known as the Discovery Kids Network, was established to create a
television network in the United States dedicated to high-quality children’s and family entertainment and
educational programming. The Company purchased its 50% share in THE HUB for a payment of $300,000
and certain future payments based on the value of certain tax benefits expected to be received by the
Company. The present value of the expected future payments at the acquisition date totaled approximately
$67,900 and was recorded as a component of the Company’s investment in the joint venture. The balance of
the associated liability, including imputed interest, was $72,665 and $71,234 at December 26, 2010 and
December 27, 2009, respectively, and is included as a component of other liabilities in the accompanying
balance sheet.
Voting control of the joint venture is shared 50⁄50 between the Company and Discovery. The Company has
determined that it does not meet the control requirements to consolidate the joint venture, and accounts for the
investment using the equity method of accounting. The Company’s share in the earnings (loss) of the joint
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HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)