Hasbro 2011 Annual Report Download - page 35

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the audited consolidated financial statements of
the Company included in Part II Item 8 of this document.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains
forward-looking statements concerning the Company’s expectations and beliefs. See Item 1A “Forward-Looking
Information and Risk Factors That May Affect Future Results” for a discussion of other uncertainties, risks and
assumptions associated with these statements.
Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in thousands of
dollars or shares, except for per share amounts.
EXECUTIVE SUMMARY
Hasbro, Inc. (“Hasbro” or the “Company”) is a worldwide leader in branded entertainment and play for
children and families. With a consumer focus, Hasbro applies its brand blueprint to its broad portfolio of
properties. The brand blueprint revolves around the objectives of continuously re-imagining, re-inventing, and
re-igniting the Company’s existing brands, imagining, inventing and igniting new brands, and offering
consumers the ability to experience the Company’s brands in all areas of their lives.
To accomplish these objectives, the Company offers consumers the ability to experience its branded play
through innovative toys and games, digital media, lifestyle licensing and publishing and entertainment, including
television programming and motion pictures. The Company’s focus remains on growing core owned and
controlled brands, developing new and innovative products which respond to market insights, offering
entertainment experiences which allow consumers to experience the Company’s brands across multiple forms
and formats, and optimizing efficiencies within the Company to increase operating margins and maintain a strong
balance sheet.
The Company earns revenue and generates cash primarily through the sale of a broad variety of toy and
game products and distribution of television programming based on the Company’s properties, as well as through
the out-licensing of rights for use of its properties in connection with complementary products, including digital
media and games and lifestyle products, offered by third-parties. The Company’s core brands represent
Company-owned brands or brands which if not entirely owned, are broadly controlled by the Company, and
which have been successful over the long term. The Company’s core brands include TRANSFORMERS, NERF,
MY LITTLE PONY, LITTLEST PET SHOP, MONOPOLY, FURREAL FRIENDS, MAGIC: THE
GATHERING, PLAY-DOH, PLAYSKOOL, MILTON BRADLEY, PARKER BROTHERS and G.I. JOE. The
Company has a large portfolio of owned and controlled brands, which can be introduced in new forms and
formats over time. These brands may also be further extended by pairing a licensed concept with a core brand.
By focusing on core brands, the Company is working to build a more consistent revenue stream and basis for
future growth, and to leverage profitability. During 2011 the Company had strong revenues from core brands
such as TRANSFORMERS, NERF, FURREAL FRIENDS, MAGIC: THE GATHERING, LITTLEST PET
SHOP, PLAY-DOH, and PLAYSKOOL.
The Company’s innovative product offerings encompass a broad variety of toys including boys’ action
figures, vehicles and playsets, girls’ toys, electronic toys, plush products, preschool toys and infant products,
electronic interactive products, creative play and toy-related specialty products. Games offerings include board,
card, electronic, trading card, role-playing and DVD games.
While the Company believes it has built a more sustainable revenue base by developing and maintaining its
core brands and avoiding reliance on licensed entertainment properties, it continues to opportunistically enter
into or leverage existing strategic licenses which complement its brands and key strengths and allow the
Company to offer innovative products based on movie, television, music and other entertainment properties
owned by third parties. The Company’s primary licenses include its agreements with Marvel Characters B.V.
(“Marvel”) for characters in the Marvel universe, including IRON MAN and SPIDER-MAN; Lucas Licensing,
Ltd. (“Lucas”), related to the STAR WARS brand; and Sesame Workshop, related to the SESAME STREET
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