Hasbro 2013 Annual Report Download - page 77

HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)
the Entertainment and Licensing segment and the amortization will be deductible for income tax purposes. The
$48,000 value of the redeemable noncontrolling interests has been presented in the consolidated balance sheets as
temporary equity between liabilities and shareholders’ equity. This presentation is required because the Company
has the obligation to purchase the remaining 30% of Backflip in the future contingent on the achievement by
Backflip of certain predetermined financial performance metrics.
The consolidated statements of operations for the year ended December 29, 2013 include the operations of
Backflip from the closing date of July 8, 2013. Actual and pro forma results have not been disclosed because they
are not material to the consolidated financial statements. Net loss attributable to noncontrolling interests for the
year ended December 29, 2013 was $2,270.
A summary of the Company’s other intangibles, net at December 29, 2013 and December 30, 2012:
2013 2012
Acquired product rights .......................................... $788,544 751,016
Licensed rights of entertainment properties ........................... 256,555 256,555
Accumulated amortization ........................................ (744,838) (666,650)
Amortizable intangible assets ...................................... 300,261 340,921
Product rights with indefinite lives .................................. 75,738 75,738
Total other intangibles, net ........................................ $375,999 416,659
Intangible assets, other than those with indefinite lives, are reviewed for indications of impairment
whenever events or changes in circumstances indicate the carrying value may not 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 produce various products. A portion of the amortization of
these product rights will fluctuate depending on brand activation, related revenues during an annual period and
future expectations, as well as rights reaching the end of their useful lives. The Company currently estimates
amortization expense related to the above intangible assets for the next five years to be approximately:
2014 ..................................................................... $56,000
2015 ..................................................................... 44,000
2016 ..................................................................... 36,000
2017 ..................................................................... 35,000
2018 ..................................................................... 24,000
(5) Equity Method Investment
The Company owns a 50% interest in a joint venture, Hub Television Networks, LLC (“Hub Network”), with
Discovery Communications, Inc. (“Discovery”). Hub Network was established to create a cable television network
in the United States dedicated to high-quality children’s and family entertainment. The Company purchased its
50% share in Hub Network for a payment of $300,000 and certain future payments based on the value of certain
tax benefits expected to be received by the Company. The present value of the expected future payments at the
acquisition date totaled approximately $67,900 and was recorded as a component of the Company’s investment in
the joint venture. The balance of the associated liability, including imputed interest, was $69,749 and $71,072 at
December 29, 2013 and December 30, 2012, respectively, and is included as a component of other liabilities in the
accompanying consolidated balance sheets. During 2013, 2012 and 2011, the Company made payments under the
tax sharing agreement to Discovery of $6,541, $5,954 and $5,443, respectively.
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