Hasbro 2013 Annual Report Download

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ANNUAL 2013 REPORT

Table of contents

  • Page 1
    annual 2013 r e p o r t

  • Page 2

  • Page 3
    ..., our agreements for Marvel and Star Wars extend to the end of 2020 and cover all film and television over that time. The Walt Disney Company's planned entertainment slate provides extensive franchise support to build upon for years to come. As a result of our brand blueprint execution and focus...

  • Page 4
    ... in all Hasbro's major international regions: Europe, Latin America and Asia Pacific. Profitability in the Emerging Markets also increased, growing more than 40% year-over-year to 10.1% operating profit margin versus 8.9% in 2012. This improvement is the result of strong top-line growth driven by...

  • Page 5
    ...five years, we opened and expanded offices in new and emerging markets and implemented global development and marketing organizations. As a result, Emerging Market revenues grew at a 30% compound annual growth rate for the five year period, while operating profit in these markets expanded 96% during...

  • Page 6
    ...U.S. and Canada segment. In its second year, FURBY was the #1 toy in the top five European markets according to NPD.4 Leveraging the success of our global television content, LITTLEST PET SHOP, is poised for re-launch in 2014 with new product and an integrated entertainment, social media and digital...

  • Page 7
    ... the very best developers of intellectual property in the world, including Disney, Marvel, Lucasfilm, Rovio and Sesame Street, to bring their characters and their brands to life with innovative toys and games for children and families globally. All of our partners have robust plans in place for new...

  • Page 8
    ..., 2012 net earnings were $370.8 million, or $2.81 per diluted share and operating profit margins were 14.7%. 2 3 4 Source: The NPD Group | U.S. Retail Tracking Service Source: The NPD Group | Retail Tracking Service, Annual 2013 (U.S., Germany, Spain, U.K., France) Source: The NPD Group | Retail...

  • Page 9
    ... North America executive officers Brian D. Goldner President and Chief Executive Officer David D. r. Hargreaves Executive Vice President and Chief Strategy Officer Deborah M. thomas Executive Vice President and Chief Financial Officer Duncan J. Billing Executive Vice President and Chief Development...

  • Page 10
    ... Index 2009 2010 2011 2012 2013 $100 $100 $100 $114 $132 $145 $177 $151 $183 $121 $155 $193 $138 $176 $237 $219 $235 $339 Note: Data reflects Hasbro's fiscal year ends. Source: Data provided by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2014...

  • Page 11
    ... (State of Incorporation) 05-0155090 (I.R.S. Employer Identification No.) 1027 Newport Avenue, Pawtucket, Rhode Island (Address of Principal Executive Offices) 02861 (Zip Code) Registrant's telephone number, including area code (401) 431-8697 Securities registered pursuant to Section 12(b) of...

  • Page 12
    ...Risk Factors ...Unresolved Staff Comments ...Properties ...Legal Proceedings ...Mine Safety Disclosures ... 1 10 24 24 25 25 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ...Item 6. Selected Financial Data ...Item 7. Management...

  • Page 13
    ... play for children and families through creative expression of the Company's world class brand portfolio. From toys and games to television programming, motion pictures, digital gaming and a comprehensive licensing program, Hasbro executes its brand blueprint in all of its operations. At the center...

  • Page 14
    ... offerings include action battling, board, offthe-board, digital, card, electronic, trading card and role-playing games. As part of our brand blueprint, we seek to expand our brands through entertainment, including television and movies, digital gaming and out-licensing. Hasbro Studios LLC ("Hasbro...

  • Page 15
    ...by Hasbro Studios in 2013 and 2014. These brands are further supported by digital gaming with licensed partners. The MY LITTLE PONY brand was also re-imagined with the successful launch of MY LITTLE PONY EQUESTRIA GIRLS product line which was supported by the release of an animated movie in 2013 and...

  • Page 16
    ... PONY, NERF, PLAY-DOH, PLAYSKOOL, SESAME STREET products, STAR WARS products and TRANSFORMERS. International The International segment engages in the marketing and sale of our product categories to retailers and wholesalers in most countries in Europe, Latin and South America and the Asia Pacific...

  • Page 17
    ...gaming business seeks to promote our brands through the out-licensing of our intellectual properties to a number of partners who develop and offer digital games for play on mobile devices, personal computers, and video game consoles based on those brands. Our agreement with Electronic Arts Inc. ("EA...

  • Page 18
    .... The toy and game business is also characterized by customer order patterns which vary from year to year largely because of differences each year in the degree of consumer acceptance of product lines, product availability, marketing strategies and inventory policies of retailers, the dates of...

  • Page 19
    ... these top three customers. We advertise many of our toy and game products extensively on television. In addition, we engage in digital marketing and advertising for our brands. Generally our advertising highlights selected items in our various product groups in a manner designed to promote the sale...

  • Page 20
    ... States and international toy and game designers, manufacturers and marketers. We also compete with companies that offer branded entertainment focused on children and their families. Competition is based primarily on meeting consumer entertainment preferences and on the quality and play value of...

  • Page 21
    ... to entry as well as the emergence of new technologies continually creates new opportunities for existing competitors and startups to develop products that compete with our entertainment and toy and game offerings. Employees At December 29, 2013, we employed approximately 5,000 persons worldwide...

  • Page 22
    ..., North America from 2012 to 2013; prior thereto; President, Latin America, Asia Pacific and Emerging Markets from 2006 to 2012. Availability of Information Our internet address is http://www.hasbro.com. We make our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form...

  • Page 23
    scheduled new product introductions or our expectations concerning the future acceptance of products by customers, the content and timing of planned entertainment releases including motion pictures, television and digital products; and marketing and promotional efforts, research and development ...

  • Page 24
    ... the offerings of consumer electronics companies, digital media and social media companies. To meet this challenge we, and our competitors, are designing and marketing products which incorporate increasing technology, seek to combine digital and analog play, and capitalize on new play patterns and...

  • Page 25
    ... credit markets, or that otherwise damage the financial health of our retail customers and consumers, can harm our business and financial performance. We design, manufacture and market a wide variety of entertainment and consumer products worldwide through sales to our retail customers and directly...

  • Page 26
    ... license to the STAR WARS property is granted by Lucas Licensing Ltd. and Lucasfilm Ltd. (together "Lucas"). Both Marvel and Lucas are owned by The Walt Disney Company. Entertainment is an increasingly important success factor for our brand awareness and brand building. Entertainment media, in forms...

  • Page 27
    ... net earnings. Our business is seasonal and therefore our annual operating results will depend, in large part, on our sales during the relatively brief holiday shopping season. This seasonality is exacerbated by retailers' quick response inventory management techniques. Sales of our toys, games and...

  • Page 28
    ... retail customers could negatively impact our revenues and profitability. Part of our strategy to remain relevant to children and families is to offer innovative products incorporating greater technology and which combine digital and analog play. These products can be more difficult and expensive...

  • Page 29
    ...increased risk of not achieving sales sufficient to recover our costs. Additionally, designing, developing and producing electronic and digital products requires different competencies and follows different timelines than traditional toys and games. Delays in the design, development or production of...

  • Page 30
    ... reduce our margins, reduce our profitability and harm our business. Other conditions, such as the unavailability of sufficient quantities of electrical components, may impede our ability to manufacture, source and ship new and continuing products on a timely basis. Additional factors outside of our...

  • Page 31
    ...and licensed to us. The success of entertainment properties for which we have a license, such as MARVEL, STAR WARS, SESAME STREET or ROVIO related products, can significantly affect our revenues and profitability. If we produce a line of products based on a movie or television series, the success of...

  • Page 32
    ...increased innovation and a change in the way we go to market with gaming products in order to remain successful in the gaming business in the future, we began implementing a strategy in 2011 to reinvent our gaming business. The objective of this plan was to stabilize our gaming business in 2012, and...

  • Page 33
    ... our processes, increase efficiency and work to reduce our expenses. To improve our profitability and competitiveness, in the fourth quarter of 2012 we implemented a global cost savings initiative. The objective of this initiative is to reduce our operating costs by an annual gross amount of $100...

  • Page 34
    ... in sanctions which could have a negative impact on our business, financial condition and results of operations. We may also be subject to involuntary product recalls or may voluntarily conduct a product recall. While costs associated with product recalls have generally not been material to our...

  • Page 35
    ... the key talented individuals at these companies would continue to work for us after the acquisition or that they would develop popular and profitable products or services in the future. Failure to operate our information systems and implement new technology effectively could disrupt our business or...

  • Page 36
    ... Comments. None. Item 2. Properties. Hasbro owns its corporate headquarters in Pawtucket, Rhode Island consisting of approximately 343,000 square feet, which is used by corporate functions as well as the Global Operations and Entertainment and Licensing segments. The Company also owns an adjacent...

  • Page 37
    .... In 2013, an inventor brought claims against the Company based on two license agreements between the parties. One license agreement related to certain products included in the Company's SUPER SOAKER product line. The other agreement related to certain products included in Hasbro's NERF product line...

  • Page 38
    ... 20, 2014 was 8,800. See Part III, Item 12 of this report for the information concerning the Company's "Equity Compensation Plans". Dividends Declaration of dividends is at the discretion of the Company's Board of Directors and will depend upon the earnings and financial condition of the Company and...

  • Page 39
    ... a number of factors, including the price of the Company's stock. The Company may suspend or discontinue the program at any time and there is no expiration date. Item 6. Selected Financial Data. Fiscal Year 2011 (Thousands of dollars and shares except per share data and ratios) 2013 2012 2010 2009...

  • Page 40
    ... toys, electronic toys, plush products, preschool toys and infant products, electronic interactive products, creative play and toy-related specialty products. Games offerings include boys' action, board, off-the-board, digital, card, electronic, trading card and role-playing games. While the Company...

  • Page 41
    ... 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 SPIDER-MAN and THE AVENGERS...

  • Page 42
    ... and Canada. The International segment consists of the Company's European, Asia Pacific and Latin and South American toy and game marketing and sales operations. The Company's Entertainment and Licensing segment includes the Company's lifestyle licensing, digital licensing and gaming, movie and...

  • Page 43
    ... expenses to the inventor. In February 2014, the Company and the inventor settled claims arising from or relating to this license agreement and a license agreement between the parties relating to the Company's SUPER SOAKER product line for $58,040. For the year ended December 29, 2013, the Company...

  • Page 44
    ... related to the key licensed brands BEYBLADE, MARVEL and, to a lesser extent, STAR WARS. In 2012, net revenues benefited from higher sales of MARVEL products based on the theatrical releases of MARVEL'S THE AVENGERS and THE AMAZING SPIDER-MAN. During 2013, the Company's MARVEL sales were primarily...

  • Page 45
    ... MY LITTLE PONY products have gained momentum with support from the successful television program, MY LITTLE PONY: FRIENDSHIP IS MAGIC, as well as the third quarter 2013 introduction of MY LITTLE PONY EQUESTRIA GIRLS fashion doll products which was supported by the release of an animated movie in...

  • Page 46
    ... LITTLE PONY and EASY BAKE products as well as the introduction of FURBY and ONE DIRECTION products contributed to growth in the girls' category. These increases were partially offset by lower net revenues from FURREAL FRIENDS, STRAWBERRY SHORTCAKE, LITTLEST PET SHOP and BABY ALIVE products in 2012...

  • Page 47
    ... LITTLE PONY products as well as the introduction of FURBY products in non-English speaking markets and NERF REBELLE products. This growth was partially offset by lower net revenues from LITTLEST PET SHOP and FURREAL FRIENDS products. In 2012, higher net revenues from MY LITTLE PONY compared to 2011...

  • Page 48
    ... percentage coming from emerging markets, which currently have lower operating profit margins than the Company has in developed markets. Entertainment and Licensing Entertainment and Licensing segment net revenues increased 5% in 2013 compared to 2012 and 12% in 2012 compared to 2011. Increased net...

  • Page 49
    ... impacted cost of sales, product development and selling, distribution and administration expense for the year ended December 30, 2012. • In 2011, the Company incurred costs of $14,385 associated with establishing Hasbro's Gaming Center of Excellence. These charges impacted product development and...

  • Page 50
    ...release. Significant sales of MARVEL products, particularly those related to MARVEL'S THE AVENGERS and THE AMAZING SPIDER-MAN, in 2012 and BEYBLADE and TRANSFORMERS movie-related products in 2011 resulted in higher royalty expenses in those years compared to 2013. Product development expense in 2013...

  • Page 51
    ... of net revenues, in 2011. The increase in 2013 compared to 2012 reflects investments in emerging markets, information systems, new facilities, and certain brands, including MAGIC: THE GATHERING and the acquisition of Backflip. Higher compensation and legal expenses also contributed to the increase...

  • Page 52
    ... used for television program production. Cash from operations in 2013, 2012 and 2011 also includes long-term royalty advance payments of $25,000 made to Hub Network in each of the three years. 2013 also includes payments totaling approximately $175,000 of royalty advances paid to Disney. Accounts...

  • Page 53
    ...to the Company's amended agreements with Disney related to its MARVEL and STAR WARS licenses, contributed to increased balances in 2013 compared to 2012. Prepaid expenses and other current assets also includes approximately $3,200 related to a forwardstarting interest rate swap contract which hedges...

  • Page 54
    ...necessary for the Company to borrow higher amounts during the latter part of the year. During 2013, 2012 and 2011, the Company primarily used cash from operations and borrowings under its commercial paper program and available lines of credit. The Company has an agreement with a group of banks which...

  • Page 55
    ... on market data, historical trends and information from customers and are therefore subject to estimation. For its allowance programs that are not fixed, such as returns, the Company estimates these amounts using a combination of historical experience and current market conditions. These estimates...

  • Page 56
    ... Production Costs The Company incurs certain costs in connection with the production of television programs based primarily on the Company's toy and game brands, including animated and live-action programs and game shows. These costs are capitalized as they are incurred and amortized using the...

  • Page 57
    ... Pension expense is based on actuarial computations of current and future benefits using estimates for expected return on assets and applicable discount rates. At the end of 2007 the Company froze benefits under its two largest pension plans in the U.S., with no future benefits accruing to employees...

  • Page 58
    ... of return at the measurement date on high quality corporate bond investments currently available and expected to be available during the period to maturity of the pension benefits. The Company's weighted average discount rate for its U.S. plans used for the calculation of 2013 pension expense was...

  • Page 59
    ... the purchase price of the remaining 30%. In July 2013, the Company amended agreements with Disney related to its MARVEL and STAR WARS licenses which provide for minimum guaranteed royalty payments and requires the Company to make minimum expenditures on marketing and promotional activities. In...

  • Page 60
    ... 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...

  • Page 61
    ... shipping schedules. The business of the Company is characterized by customer order patterns which vary from year to year largely because of differences in the degree of consumer acceptance of a product line, product availability, marketing strategies, inventory levels, policies of retailers...

  • Page 62
    ... issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 26, 2014 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting. /s/ KPMG LLP Providence, Rhode Island February 26, 2014 50

  • Page 63
    ... Except Share Data) 2013 2012 ASSETS Current assets Cash and cash equivalents ...Accounts receivable, less allowance for doubtful accounts of $19,000 in 2013 and $19,600 in 2012 ...Inventories ...Prepaid expenses and other current assets ...Total current assets ...Property, plant and equipment...

  • Page 64
    ... Share Data) 2013 2012 2011 Net revenues ...Costs and expenses Cost of sales ...Royalties ...Product development ...Advertising ...Amortization of intangibles ...Program production cost amortization ...Selling, distribution and administration ...Total expenses ...Operating profit ...Non-operating...

  • Page 65
    HASBRO, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Earnings Fiscal Years Ended in December (Thousands of Dollars) 2013 2012 2011 Net earnings ...Other comprehensive earnings...,100 299,635 (2,270) - $324,370 299,635 See accompanying notes to consolidated financial statements. 53

  • Page 66
    ... Dollars) 2013 2012 2011 Cash flows from operating activities Net earnings ...$ 283,928 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation of plant and equipment ...102,799 Amortization of intangibles ...78,186 Program production cost amortization ...47...

  • Page 67
    ... ...- - - Stock-based compensation expense ...- 19,204 - Dividends declared ...- - (186,874) Balance, December 30, 2012 ...$104,847 655,943 3,354,545 Redeemable noncontrolling interests related to acquisition of Backflip Studios, LLC ...- - - Net earnings attributable to Hasbro, Inc...- - 286,198...

  • Page 68
    ... customer's financial condition and the level of credit being extended. For customers on credit who are experiencing financial difficulties, management performs additional financial analyses before shipping orders. The Company uses a variety of financial transactions, based on availability and cost...

  • Page 69
    ... of Dollars and Shares Except Per Share Data) Inventories Inventories are valued at the lower of cost (first-in, first-out) or market. Based upon a consideration of quantities on hand, actual and projected sales volume, anticipated product selling price and product lines planned to be discontinued...

  • Page 70
    ... overheads and other inventoryrelated costs such as obsolescence. Royalties The Company enters into license agreements with inventors, designers and others for the use of intellectual properties in its products. These agreements may call for payment in advance or future payment of minimum...

  • Page 71
    ... value is determined using a discounted cash flow model which is primarily based on management's future revenue and cost estimates. Shipping and Handling Hasbro expenses costs related to the shipment and handling of goods to customers as incurred. For 2013, 2012 and 2011, these costs were $155,316...

  • Page 72
    ...groups of employees, which may provide benefits to such employees following their period of employment but prior to their retirement. The Company measures the costs of these obligations based on actuarial computations. Stock-Based Compensation The Company has a stock-based employee compensation plan...

  • Page 73
    ... the Company with the related proceeds. Dilutive securities also include shares issuable under restricted stock unit award agreements. Options and restricted stock unit awards totaling 760, 3,409 and 1,851 for 2013, 2012 and 2011, respectively, were excluded from the calculation of diluted earnings...

  • Page 74
    ... and Shares Except Per Share Data) A reconciliation of net earnings and average number of shares for each of the three fiscal years ended December 29, 2013 is as follows: 2013 Basic Diluted Basic 2012 Diluted Basic 2011 Diluted Net earnings attributable to Hasbro, Inc...Average shares outstanding...

  • Page 75
    HASBRO, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) Changes in the components of accumulated other comprehensive earnings...from AOCE to earnings. (3) Property, Plant and Equipment 2013 2012 Land and ...

  • Page 76
    ... reporting units within the Company's operating segments. Changes in the carrying amount of goodwill, by operating segment, for the years ended December 29, 2013 and December 30, 2012 are as follows: U.S. and Canada International Entertainment and Licensing Total 2013 Balance at December 30, 2012...

  • Page 77
    ... be recoverable. During 2013, the Company incurred $19,736 in impairment charges related to certain product lines which the Company exited as well as product lines with reduced expectations. The Company will continue to incur amortization expense related to the use of acquired and licensed rights to...

  • Page 78
    ... assets. The Company also enters into certain other transactions with Hub Network including the licensing of television programming and the purchase of advertising. During 2013, 2012 and 2011, these transactions were not material. (6) Program Production Costs Program production costs are included...

  • Page 79
    ... 2013, Hasbro's working capital needs were fulfilled by cash generated from operations, borrowings under lines of credit and utilization of its commercial paper program discussed below. The unsecured committed line of credit, as amended on October 2012 (the "Agreement"), provides the Company with...

  • Page 80
    ... would use in pricing the asset or liability. The Company believes that this is the best information available for use in the fair value measurement. Interest rates for the 6.30% Notes Due 2017 may be adjusted upward in the event that the Company's credit rating from Moody's Investor Services, Inc...

  • Page 81
    HASBRO, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) recorded a gain of $3,191 and $15,511 on these instruments in other (income) expense, net for the years ended December 30, 2012 and December 25, 2011, ...

  • Page 82
    ... and liabilities at December 29, 2013 and December 30, 2012 are: 2013 2012 Deferred tax assets: Accounts receivable ...Inventories ...Loss carryforwards ...Operating expenses ...Pension ...Other compensation ...Postretirement benefits ...Tax sharing agreement ...Other ...Gross deferred tax assets...

  • Page 83
    ... Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) A reconciliation of unrecognized tax benefits, excluding potential interest and penalties, for the fiscal years ended December 29, 2013, December 30, 2012 and December 25, 2011 is as follows: 2013 2012 2011...

  • Page 84
    ... in the open market or through privately negotiated transactions. The Company has no obligation to repurchase shares under the authorization and the time, actual number, and the value of the shares which are repurchased will depend on a number of factors, including the price of the Company's common...

  • Page 85
    ... of Dollars and Shares Except Per Share Data) At December 29, 2013 and December 30, 2012, the Company had the following assets and liabilities measured at fair value in its consolidated balance sheets: Fair Value Measurements Using Quoted Prices in Active Markets Significant for Other Significant...

  • Page 86
    ... are valued at the market value of the underlying common stock at the date of grant and are subsequently amortized over the periods during which the restrictions lapse, generally between three and five years. During 2013, 2012 and 2011, the Company recognized compensation expense, net of forfeitures...

  • Page 87
    ... Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) In October 2012, as part of an Amended and Restated Employment Agreement, the Company's Chief Executive Officer was awarded 587 shares to be granted in two tranches across 2013 and 2014. As of May 2013...

  • Page 88
    ... results. Awards may vary from 0% to 200% of the target number of shares. Furthermore, on October 2012, as part of an Amended and Restated Employment Agreement, Stock Performance Awards awarded to the Company's Chief Executive Officer in 2013 may be adjusted at the time of vesting dependent on the...

  • Page 89
    ...value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in the fiscal years 2013, 2012 and 2011: 2013 2012 2011 Risk-free interest rate ...Expected dividend yield ...Expected volatility...

  • Page 90
    ... accounts for these awards as a liability which is marked to market through the consolidated statements of operations based on the current market price and lapsed portion of the vesting period. In 2013, 2012 and 2011, the Company recognized expense of $1,316, $1,348 and $804, respectively related to...

  • Page 91
    ... and unrecognized prior service cost related to its defined benefit pension plans of $3,351 and $98, respectively, to be included as a component of net periodic benefit cost. The Company expects amortization of unrecognized prior service credits in 2014 related to its postretirement plan of $(457...

  • Page 92
    HASBRO, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) Assumptions used to determine the year-end pension and postretirement benefit obligations are as follows: 2013 2012 Pension Weighted average discount rate ...

  • Page 93
    ... so that the total portfolio risk exposure and risk-adjusted returns best meet the Plans' long-term obligations to employees. The Company's asset allocation includes alternative investment strategies designed to achieve a modest absolute return in addition to the return on an underlying asset class...

  • Page 94
    ... 29, 2013 and the aggregate of the benefits earned during the period and the interest cost would have both increased by approximately 3%. Hasbro works with external benefit investment specialists to assist in the development of the long-term rate of return assumptions used to model and determine...

  • Page 95
    ... certain plans which continue the Company's health and life insurance contributions for employees who have left Hasbro's employ under terms of its long-term disability plan. (15) Leases Hasbro occupies offices and uses certain equipment under various operating lease arrangements. The rent expense...

  • Page 96
    ... in United States and Hong Kong dollars, and Euros. Further, Hasbro uses forward-starting interest rate swap agreements to hedge anticipated interest payments. All contracts are entered into with a number of counterparties, all of which are major financial institutions. The Company believes that...

  • Page 97
    ... Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) The Company has a master agreement with each of its counterparties that allows for the netting of outstanding forward contracts. The fair values of the Company's foreign currency forward contracts designated...

  • Page 98
    ...amounts for 2013 and 2012 were $187,130 and $174,870, respectively, of bonds related to tax assessments in Mexico. See note 10 for additional discussion. The Company enters into license agreements with inventors, designers and others for the use of intellectual properties in its products. Certain of...

  • Page 99
    HASBRO, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) 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 ...

  • Page 100
    ... toy and game products in markets outside of the U.S. and Canada, primarily in the European, Asia Pacific, and Latin and South American regions. The Company's Entertainment and Licensing segment includes the Company's lifestyle licensing, digital gaming, movie and television entertainment operations...

  • Page 101
    ... Share Data) Information by segment and a reconciliation to reported amounts are as follows: Revenues from External Customers Affiliate Revenue Operating Profit (Loss) Depreciation and Amortization Capital Additions Total Assets 2013 U.S. and Canada ...International ...Entertainment and Licensing...

  • Page 102
    ... international markets include Europe, Canada, Mexico and Latin America, Australia, and Hong Kong. Other Information Hasbro markets its products primarily to customers in the retail sector. Although the Company closely monitors the creditworthiness of its customers, adjusting credit policies...

  • Page 103
    ... have multi-year terms and provide the Company with the right to market and sell designated classes of products based on Marvel's portfolio of brands, including SPIDER-MAN and THE AVENGERS, and Lucas's STAR WARS brand. Hasbro's net revenues from these licenses can be significant in any given year...

  • Page 104
    ... of Dollars and Shares Except Per Share Data) (20) Quarterly Financial Data (Unaudited) First Second Quarter Third Fourth Full Year 2013 Net revenues ...Operating profit ...Earnings (loss) before income taxes ...Net earnings (loss) ...Net earnings (loss) attributable to Hasbro, Inc... $663,694...

  • Page 105
    ... controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective. Management's Report on Internal Control over Financial Reporting The Company's management is responsible for establishing and maintaining...

  • Page 106
    ... earnings, cash flows and shareholders' equity for each of the fiscal years in the three-year period ended December 29, 2013, and our report dated February 26, 2014 expressed an unqualified opinion on those consolidated financial statements. /s/ KPMG LLP Providence, Rhode Island February 26, 2014...

  • Page 107
    ...the Company's Latin America business. There were no significant changes in the Company's internal controls over financial reporting resulting from the completion of these phases of the project. Item 9B. None. PART III Item 10. Directors, Executive Officers and Corporate Governance. Other Information...

  • Page 108
    ... by this item is contained under the captions "Voting Securities and Principal Holders Thereof", "Security Ownership of Management" and "Equity Compensation Plans" in the Company's definitive proxy statement for the 2014 Annual Meeting of Shareholders and is incorporated herein by reference. Item 13...

  • Page 109
    ... Scotia Trust Company of New York. (Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed March 11, 2010, File No. 1-6682.) Material Contracts (a) Amended and Restated Revolving Credit Agreement, dated as of October 25, 2012, by and among Hasbro, Inc., Hasbro SA...

  • Page 110
    ....2 to the Company's Quarterly Report on Form 10-Q for the period ended March 29, 2009, File No. 1-6682.) (g) Amendment, dated September 27, 2011, to License Agreements by and between Hasbro, Inc., Marvel Characters B.V. and Spider-Man Merchandising L.P. (Portions of this agreement have been omitted...

  • Page 111
    ...6682.) Form of Amendment, dated December 12, 2007, to Form of Employment Agreement included as Exhibit 10(s) above. (Incorporated by reference to Exhibit 10(ee) to the Company's Annual Report on Form 10-K for the Fiscal Year Ended December 30, 2007, File No. 1-6682.) Hasbro, Inc. Retirement Plan for...

  • Page 112
    ... C to the definitive proxy statement for the Company's 2013 Annual Meeting of Shareholders, File No. 1-6682.) Form of Fair Market Value Stock Option Agreement under the Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan. (Applicable to Duncan Billing, John Frascotti, Wiebe Tinga and Deborah...

  • Page 113
    .... 2009 Senior Management Annual Performance Plan. (Incorporated by reference to Appendix D to the Company's definitive proxy statement for its 2009 Annual Meeting of Shareholders, File No. 1-6682.) Form of Non-Competition, Non-Solicitation and Confidentiality Agreement. (Applicable to Duncan Billing...

  • Page 114
    ... Severance Plan for Designated Senior Executives. (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed May 23, 2011, File No. 1-6682.) Hasbro, Inc. Clawback Policy. (Incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K dated as...

  • Page 115
    ... of Directors and Shareholders Hasbro, Inc.: Under date of February 26, 2014, we reported on the consolidated balance sheets of Hasbro, Inc. and subsidiaries as of December 29, 2013 and December 30, 2012, and the related consolidated statements of operations, comprehensive earnings, cash flows, and...

  • Page 116
    ... (Thousands of Dollars) Balance at Beginning of Year Expense (Benefit) Other Additions Write-Offs and Other(a) Balance at End of Year Valuation accounts deducted from assets to which they apply - for doubtful accounts receivable: 2013 ...2012 ...2011 ... $19,600 $23,700 $31,200 - (1,200) (200...

  • Page 117
    ...INC. (Registrant) By: /s/ Brian D. Goldner Brian D. Goldner President and Chief Executive Officer Date: February 26, 2014 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities...

  • Page 118
    Signature Title Date /s/ Tracy A. Leinbach Director February 26, 2014 Tracy A. Leinbach /s/ Edward M. Philip Director February 26, 2014 Edward M. Philip 106

  • Page 119
    ... information about Hasbro are invited to contact: Hasbro Investor Relations 1027 Newport Avenue P.O. Box 1059 Pawtucket, Rhode Island 02861 TEL: (401) 431-8447 EMAIL: annual Meeting The annual meeting of shareholders will be held at 11:00 a.m. on Thursday, May 22, 2014 at: Hasbro's Corporate Office...

  • Page 120
    1027 Newport Avenue Pawtucket, Rhode Island 02861 hasbro.com 002CSN36A0