Hasbro 2013 Annual Report Download - page 16

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products under our licensing agreement with Sesame Workshop that provides us with the licensed rights to
produce products based on the SESAME STREET portfolio of characters, including ELMO, GROVER and
COOKIE MONSTER, among others.
Segments
Organizationally, our three principal segments are U.S. and Canada, International and Entertainment and
Licensing. The U.S. and Canada and International segments engage in the marketing and selling of various toy
and game products described above. Our toy and game products are primarily developed by a global
development group while our global marketing function establishes brand direction and assists the segments in
establishing certain local marketing programs. The costs of these groups are allocated to the principal segments.
Our U.S. and Canada segment covers the United States and Canada while the International segment primarily
includes Europe, the Asia Pacific region and Latin and South America. The Entertainment and Licensing
segment engages in the out-licensing of our trademarks, characters and other brand and intellectual property
rights to third parties for non-competing products and also conducts our movie, television and digital gaming
entertainment operations, including the operations of Hasbro Studios and Backflip. Our Global Operations
segment is responsible for arranging product manufacturing and sourcing for the U.S. and Canada and
International segments. Financial information with respect to our segments and geographic areas is included in
note 19 to our consolidated financial statements, which are included in Item 8 of this Form 10-K.
The Company’s strategy is focused around re-imagining, re-inventing, and re-igniting its existing brands,
and imagining, inventing, and igniting new brands, globally through the development and marketing of
innovative toy and game products, providing immersive entertainment experiences for our consumers, and
expansion of our brands into other consumer products through broad licensing programs, including digital media
and lifestyle products. The following is a discussion of each segment.
U.S. and Canada
This segment engages in the marketing and sale of our product categories in the United States and
Canada. The U.S. and Canada segment’s strategy is based on promoting our brands through innovation and
reinvention of toys and games. This is accomplished through introducing new products and initiatives driven by
consumer and marketplace insights and leveraging opportunistic toy and game lines and licenses. This strategy
leverages off of efforts to increase consumer awareness of the Company’s brands through entertainment
experiences, including motion pictures and television programming. Major 2013 brands and products included
BEYBLADE products, DUEL MASTERS, FURBY, FURREAL FRIENDS, MAGIC: THE GATHERING,
MARVEL products, MY LITTLE 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 region and through
distributors in those countries where we have no direct presence. We have offices in more than 35 countries
contributing to sales in more than 120 countries. In addition to growing brands and leveraging opportunistic toy
lines and licenses, we seek to grow our international business by continuing to expand into emerging markets in
Eastern Europe, Asia and Latin and South America. Emerging markets are an area of high priority for Hasbro as
they offer greater opportunities for revenue growth. Key emerging markets include Russia, Brazil and the
People’s Republic of China (“China”). In 2013 and 2012, net revenues in emerging markets grew 25% and 16%,
respectively, and represented more than 10% of consolidated net revenues in each of these years. Key brands
during 2013 included FURBY, FURREAL FRIENDS, LITTLEST PET SHOP, MAGIC: THE GATHERING,
MARVEL products, MONOPOLY, MY LITTLE PONY, NERF, PLAY-DOH, PLAYSKOOL, STAR WARS
products and TRANSFORMERS.
Entertainment and Licensing
Our Entertainment and Licensing segment includes our lifestyle licensing, digital gaming, television and
movie entertainment operations. Our lifestyle licensing category seeks to promote our brands through the out-
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