Hasbro 2011 Annual Report Download - page 51

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 25, 2011. Future payments required under these and other obligations as of
December 25, 2011 are as follows:
Payments due by Fiscal Year
Certain Contractual Obligations 2012 2013 2014 2015 2016 Thereafter Total
Long-term debt ................. $ — — 425,000 — — 959,895 1,384,895
Interest payments on long-term
debt ........................ 87,084 87,084 74,069 61,053 61,053 855,212 1,225,555
Operating lease commitments ..... 39,868 37,461 30,803 16,047 9,131 22,353 155,663
Future minimum guaranteed
contractual payments .......... 40,314 93,173 14,775 14,775 14,375 57,500 234,912
Tax sharing agreement ........... 6,400 6,800 7,100 7,400 7,700 94,400 129,800
Purchase commitments ........... 344,370 — — — — — 344,370
$518,036 224,518 551,747 99,275 92,259 1,989,360 3,475,195
The Company has a liability at December 25, 2011, including potential interest and penalties, of $97,661 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. 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 seven years contingent
upon the quantity and types of theatrical movie releases.
Purchase commitments represent agreements (including open purchase orders) to purchase inventory and
tooling in the ordinary course of business. The reported amounts exclude inventory and tooling purchase
liabilities included in accounts payable or accrued liabilities on the consolidated balance sheet as of
December 25, 2011.
In addition to the amounts included in the table above, the Company expects to make contributions totaling
approximately $5,800 related to its unfunded U.S. and other International pension plans in 2012. The Company
also has letters of credit and related instruments of approximately $174,082 at December 25, 2011.
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 sterling, Canadian dollar and Mexican peso and,
to a lesser extent, currencies in Latin American and Asia Pacific countries.
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