Hasbro 2013 Annual Report Download - page 78

HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)
Voting control of Hub Network is shared 50/50 between the Company and Discovery. The Company has
determined that it does not meet the control requirements to consolidate Hub Network, and accounts for the
investment using the equity method of accounting. The Company’s share in the loss of Hub Network for the
years ended December 29, 2013, December 30, 2012 and December 25, 2011 totaled $2,386, $6,015 and $7,290,
respectively, and is included as a component of other (income) expense, net in the accompanying consolidated
statements of operations.
The Company has a license agreement with Hub Network that requires the payment of royalties by the
Company to Hub Network based on a percentage of revenue derived from products related to television shows
broadcast by the joint venture. The license agreement includes a minimum royalty guarantee of $125,000,
payable in 5 annual installments of $25,000 per year, commencing in 2009, which can be earned out over
approximately a 10-year period. During 2013, 2012 and 2011, the Company paid annual installments of $25,000
each which are included in other, including long-term advances in the consolidated statements of cash flows. The
payment made in 2013 was the final installment under this agreement. As of December 29, 2013 and
December 30, 2012, the Company had $101,823 and $89,914 of prepaid royalties, respectively, related to this
agreement, $15,955 and $12,400, respectively, of which are included in prepaid expenses and other current assets
and $85,868 and $77,514, respectively, of which are included in other assets. The Company and Hub Network
are also parties to an agreement under which the Company will provide Hub Network with an exclusive first look
in the U.S. to license certain types of programming developed by the Company based on its intellectual property.
In the event Hub Network licenses the programming from the Company to air on the network, it is required to
pay the Company a license fee.
As of December 29, 2013 and December 30, 2012, the Company’s interest in Hub Network totaled
$321,876 and $330,746, respectively, and is a component of other 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 in other assets and consist of the following at December 29, 2013
and December 30, 2012:
2013 2012
Released, less amortization ........................................... $59,783 65,201
In production ...................................................... 17,683 22,909
Pre-production ..................................................... 2,499 3,865
Total program production costs ....................................... $79,965 91,975
Based on management’s total revenue estimates at December 29, 2013, 93% of the unamortized television
programming costs relating to released productions are expected to be amortized during the next three years.
Based on current estimates, the Company expects to amortize approximately $22,700 of the $59,783 of released
programs during fiscal 2014.
(7) Financing Arrangements
At December 29, 2013, Hasbro had available an unsecured committed line and unsecured uncommitted lines
of credit from various banks approximating $700,000 and $102,000, respectively. All of the short-term
borrowings outstanding at the end of 2013 and a portion of the short-term borrowings outstanding at the end of
2012 represent borrowings made under, or supported by, these lines of credit. Borrowings under the lines of
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