Hasbro 2010 Annual Report Download - page 67

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venture for the years ended December 26, 2010 and December 27, 2009 totaled $(9,323) of loss and $3,856 of
earnings, respectively, and is included as a component of other (income) expense in the accompanying
consolidated statements of operations.
The Company has entered into a license agreement with the joint venture that will require the payment of
royalties by the Company to the joint venture based on a percentage of revenue derived from products related
to television shows broadcast by the joint venture. The license agreement includes a minimum royalty
guarantee of $125,000, payable in 5 annual installments of $25,000 per year, commencing in 2009, which can
be earned out over approximately a 10-year period. During 2010 and 2009, the Company paid the first two
annual installments of $25,000 each. The Company and the joint venture are also parties to an agreement
under which the Company will provide the joint venture with an exclusive first look in the U.S. to license
certain types of programming developed by the Company based on its intellectual property. In the event the
joint venture licenses the programming from the Company to air on the network, the joint venture is required
to pay the Company a license fee.
As of December 26, 2010, the Company’s interest in the joint venture totaled $354,612 and is a
component of other assets. The Company enters into certain transactions with the joint venture including the
licensing of television programming and the purchase of advertising. During 2010 and 2009, these transactions
were not material.
(6) Program Production Costs
Program production costs consist of the following at December 26, 2010:
2010
Released, less amortization ................................................ $12,852
In production .......................................................... 19,319
Development and pre-production ........................................... 1,417
Acquired libraries....................................................... 1,827
Total program production costs ............................................. $35,415
Based on management’s total revenue estimates at December 26, 2010, approximately 95% of unamor-
tized television programming costs relating to released productions is expected to be amortized during the next
three years. The Company expects to amortize, based on current estimates, approximately $4,600 of the
$12,852 of released programs during fiscal 2011.
At December 26, 2010, acquired program libraries are being amortized based on estimates of future
expected revenues over a remaining period of approximately 2 years.
(7) Financing Arrangements
Short-Term Borrowings
At December 26, 2010, Hasbro had available an unsecured committed line and unsecured uncommitted
lines of credit from various banks approximating $500,000 and $206,400, respectively. A significant portion of
the short-term borrowings outstanding at the end of 2010 and 2009 represent borrowings made under, or
supported by, these lines of credit. Borrowings under the lines of credit were made by certain international
affiliates of the Company on terms and at interest rates generally extended to companies of comparable
creditworthiness in those markets. The weighted average interest rates of the outstanding borrowings as of
December 26, 2010 and December 27, 2009 were 5.79% and 1.23%, respectively. The Company had no
57
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)