Hasbro 2012 Annual Report Download - page 54

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 30, 2012. Future payments required under these and other obligations as of
December 30, 2012 are as follows:
Payments due by Fiscal Year
Certain Contractual Obligations 2013 2014 2015 2016 2017 Thereafter Total
Long-term debt ................ $ — 425,000 — — 350,000 609,895 1,384,895
Interest payments on long-term
debt ....................... 87,084 74,069 61,053 61,053 61,053 794,159 1,138,471
Operating lease commitments .... 39,688 26,161 13,249 7,207 4,677 13,686 104,668
Future minimum guaranteed
contractual payments ......... 98,888 21,917 20,660 19,550 19,525 46,275 226,815
Tax sharing agreement .......... 6,800 7,100 7,400 7,700 8,000 86,400 123,400
Purchase commitments .......... 262,101 — — — — — 262,101
$494,561 554,247 102,362 95,510 443,255 1,550,415 3,240,350
Included in other liabilities in the consolidated balance sheets at December 30, 2012, the Company has a
liability, including potential interest and penalties, of $123,444 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 six years contingent
upon the quantity and types of theatrical movie releases. Approximately $30,000 of these additional royalty
guarantees are expected to be paid in 2013 based on the theatrical release of IRON MAN 3.
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 30, 2012.
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 2013. The Company
also has letters of credit and related instruments of approximately $194,221 at December 30, 2012.
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
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