Hasbro 2014 Annual Report Download

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2014
Annual Report

Table of contents

  • Page 1
    A nn ua lR ep or t 20 14

  • Page 2

  • Page 3
    Dear Fellow Shareholder: 2014 was a good year for our company. As a team, and with your support, we are executing our strategic game plan to Create the World's Best Play Experiences. This transformation from a toy and game company to an organization delivering global brand experiences is delivering ...

  • Page 4
    ... the development of bigger, more global brands, which hold the greatest revenue and profit potential. These are our Franchise Brands: LITTLEST PET SHOP, MAGIC: THE GATHERING, MONOPOLY, MY LITTLE PONY, NERF, PLAY-DOH and TRANSFORMERS. Six of these seven brands grew in 2014. LITTLEST PET SHOP, the...

  • Page 5
    ...our history of delivering the best play experiences for boys remained central to our success. NERF, TRANSFORMERS and the MARVEL properties propelled our Boys category revenues for the year, which increased by 20% from 2013. In a competitive market, our brands, product innovation and the stories they...

  • Page 6
    ...which has expanded the brand's story and product lines. In 2015, we are bringing these great characters to a younger audience with the MY LITTLE PONY PLAYSKOOL FRIENDS line. Designed for 1-3 year olds, Millennium Moms who grew up with MY LITTLE PONY will have the opportunity to share this brand with...

  • Page 7
    ... 1,250 half hours of original programming, including hit and award-winning series based on Hasbro brands, such as MY LITTLE PONY, TRANSFORMERS and LITTLEST PET SHOP. These programs air on networks around the world, on streaming services and in home entertainment. Since forming the studio, we have...

  • Page 8
    ...across the Company, and, in 2014, operating profit for Entertainment and Licensing increased 33% to $60.6 million. MY LITTLE PONY and TRANSFORMERS licensing were key contributors to this growth. resulted in all seven of Hasbro's Franchise Brands increasing revenues in the U.S. and Canada segment in...

  • Page 9
    ...new platforms and brands that leverage the Company's strengths, while continuing to lead Hasbro's global manufacturing, sourcing and supply chain activities. We also added three new, highly talented individuals to our Board of Directors in 2014: Richard Stoddart, Chief Executive Officer, Leo Burnett...

  • Page 10
    ... CEO, is retiring from the Board of Directors in May after 50 years with the Company. Additionally, after 32 years, David Hargreaves, most recently Chief Strategy Officer but previously Hasbro's Chief Operating Officer and, prior to that, our Chief Financial Officer, retired in February 2015. It is...

  • Page 11
    ...Financial Officer Duncan J. Billing Executive Vice President, Chief Global Operations and Business Development Officer Barbara Finigan Executive Vice President Chief Legal Officer and Corporate Secretary John A. Frascotti President, Hasbro Brands Wiebe tinga Executive Vice President Chief Commercial...

  • Page 12
    ... Index 2010 2011 2012 2013 2014 $100 $100 $100 $155 $114 $126 $106 $117 $133 $121 $133 $163 $191 $178 $233 $202 $206 $258 Note: Data reflects Hasbro's fiscal year ends. Source: Data provided by zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2015...

  • Page 13
    ...28, 2014 Commission file number 1-6682 Hasbro, Inc. (Exact Name of Registrant, As Specified in its Charter) Rhode Island (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...

  • Page 14
    ... Financial Disclosure ...Item 9A. Controls and Procedures ...Item 9B. Other Information ...Item 10. Item 11. Item 12. Item 13. Item 14. Item 15. PART III Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management...

  • Page 15
    ... and controlled brands, including LITTLEST PET SHOP, MAGIC: THE GATHERING, MONOPOLY, MY LITTLE PONY, NERF, PLAY-DOH and TRANSFORMERS, as well as our premier partner brands. From toys and games to television programming, motion pictures, digital gaming and a comprehensive licensing program, Hasbro...

  • Page 16
    ... broadly controlled by the Company, offerings may also include products which are branded and developed under key licenses from our partners. Significant partner brands include MARVEL characters, including SPIDER-MAN and THE AVENGERS, STAR WARS, DISNEY DESCENDANTS, JURASSIC WORLD, and SESAME STREET...

  • Page 17
    ... distributed by third parties in 2014 and 2013. In 2015, the Company expects to market products supported by the following major motion picture releases: AVENGERS: AGE OF ULTRON, STAR WARS: THE FORCE AWAKENS and JURASSIC WORLD. In addition to marketing and developing action figures and accessories...

  • Page 18
    ... brands include PLAYSKOOL as well as products based on the MARVEL, STAR WARS and SESAME STREET portfolios of characters. MARVEL, STAR WARS and TRANSFORMERS RESCUE BOTS action figures and playsets included in the preschool category are marketed under the brand name PLAYSKOOL HEROES and are supported...

  • Page 19
    ...'s agreement with Electronic Arts Inc. ("EA") under which EA has the rights to develop several of Hasbro's best-selling gaming brands for mobile platforms globally. Similarly, the Company has an agreement with Activision under which Activision offers digital games based on the TRANSFORMERS brand and...

  • Page 20
    .... 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 21
    ... to drive consumer interest and market acceptance. Our toy and game products are developed by a global development group and the costs of this group are allocated to the selling entities which comprise our principal operating segments. In 2014, 2013 and 2012, we incurred expenses of $222,556, $207...

  • Page 22
    ...and reduce the number of products we would otherwise be able to bring to market. During 2014, net revenues from our three largest customers, Wal-Mart Stores, Inc., Toys "R" Us, Inc. and Target Corporation represented 16%, 9% and 8%, respectively, of consolidated global net revenues, and sales to our...

  • Page 23
    ... our operations and/or significantly increase the cost of the products which are manufactured in China and imported into other markets. Competition We are a worldwide leader in the design, manufacture and marketing of toys and games and other entertainment offerings, but our business is highly...

  • Page 24
    ... and Chief Strategy Officer Executive Vice President and Chief Financial Officer Executive Vice President, Global Operations and Business Development Executive Vice President, Chief Legal Officer and Secretary President, Hasbro Brands Executive Vice President and Chief Commercial Officer Senior...

  • Page 25
    ...Global Chief Marketing Officer from 2008 to 2013. (7) Prior thereto, President, 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...

  • Page 26
    ... array of markets. In 2014 revenues from our seven franchise brands, LITTLEST PET SHOP, MAGIC: THE GATHERING, MONOPOLY, NERF, MY LITTLE PONY, PLAY-DOH and TRANSFORMERS, totaled 55% of our aggregate net revenues. Our key partner brands, such as DISNEY, MARVEL, LUCASFILM, SESAME STREET and ROVIO, also...

  • Page 27
    ...of media development, release dates and the ultimate consumer interest in and success of these media efforts. For 2015 we are developing and marketing significant product lines tied to the scheduled motion picture releases by key partners of AVENGERS: AGE OF ULTRON, JURASSIC WORLD and STAR WARS: THE...

  • Page 28
    ..., and marketing work in accordance with our currently anticipated development schedule. There is no guarantee that we will be able to manufacture, source and ship new or continuing products in a timely manner and on a cost-effective basis to meet constantly changing consumer demands. This risk is...

  • Page 29
    ...design, manufacture and market a wide variety of entertainment and consumer products worldwide through sales to our retail customers and directly to consumers. Our financial performance is impacted by the level of discretionary consumer spending in the markets in which we operate. Recessions, credit...

  • Page 30
    ... entertainment properties, including MARVEL and STAR WARS, owned by Disney, as well as SESAME STREET and ROVIO. These licenses typically have multi-year terms and provide us with the right to market and sell designated classes of products. In recent years our sales of products under the MARVEL, STAR...

  • Page 31
    ... us, favor competitors or new entrants, increase their direct competition with us by expanding their private-label business, change their purchasing patterns, alter the manner in which they promote our products or the resources they devote to promoting and selling our products, or return substantial...

  • Page 32
    ... traditional toys and games. Our substantial sales and manufacturing operations outside the United States subject us to risks associated with international operations. We operate facilities and sell products in numerous countries outside the United States. For the year ended December 28, 2014, our...

  • Page 33
    ... developed by third parties 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...

  • Page 34
    ...for movie releases may make it increasingly difficult for us to profitably sell licensed products based on entertainment properties and may lead our customers to reduce their demand for these products in order to minimize their inventory risk. Furthermore, there can be no assurance that a successful...

  • Page 35
    ...products are sold. Hasbro has the right and exercises such right, both directly and through the use of outside monitors, to monitor compliance by our thirdparty manufacturers with our Global Business Ethics Principles and other manufacturing requirements. In addition, we do quality assurance testing...

  • Page 36
    ... 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 underlying operating costs by an annual gross amount of $100 million by the end of 2015...

  • Page 37
    .... In addition, any product recall, regardless of direct costs of the recall, may harm consumer perceptions of our products and have a negative impact on our future revenues and results of operations. Governments and regulatory agencies in the markets where we manufacture and sell products may enact...

  • Page 38
    ... locations around the world. This data relates to all aspects of our business, including current and future products and entertainment under development, and also contains certain customer, consumer, supplier, partner and employee data. We maintain systems and processes designed to protect this data...

  • Page 39
    ... 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 40
    ...to the Company's operations in Mexico. The Company filed suit in the Federal Tribunal of Fiscal and Administrative Justice in Mexico challenging the 2000 through 2004 assessments and through administrative appeals for assessments for 2005 through 2007 and 2009. During the fourth quarter of 2014, the...

  • Page 41
    ...as reported on the Composite Tape of The NASDAQ Global Select Market as well as the cash dividends declared per share of Common Stock for the periods listed. Period Sales Prices High Low Cash Dividends Declared 2014 1st Quarter ...2nd Quarter ...3rd Quarter ...4th Quarter ...2013 1st Quarter ...2nd...

  • Page 42
    ...Company announced that its Board of Directors authorized the repurchase of an additional $500 million in common stock. Item 6. Selected Financial Data. Fiscal Year 2012 (Thousands of dollars and shares except per share data and ratios) 2014 2013 2011 2010 Consolidated Statements of Operations Data...

  • Page 43
    ... and controlled brands, including LITTLEST PET SHOP, MAGIC: THE GATHERING, MONOPOLY, MY LITTLE PONY, NERF, PLAY-DOH and TRANSFORMERS, as well as its premier partner brands. From toys and games, to television programming, motion pictures, digital gaming and a comprehensive licensing program, Hasbro...

  • Page 44
    ... two planned theatrical motion picture releases based on MARVEL characters including AVENGERS: AGE OF ULTRON. Furthermore, 2015 sales of STAR WARS products will be supported by the highly anticipated release of STAR WARS: THE FORCE AWAKENS from Lucasfilm Ltd. as well as JURASSIC WORLD from Universal...

  • Page 45
    ... Company's agreement with Electronic Arts Inc. ("EA") under which EA has the rights to develop several of Hasbro's best-selling gaming brands for mobile platforms globally. Similarly, the Company has an agreement with Activision under which Activision offers digital games based on the TRANSFORMERS...

  • Page 46
    ... and Canada segment develops, markets and sells both toy and game products in the United States 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...

  • Page 47
    ...28, 2014. 2014 2013 2012 Net revenues ...Costs and expenses: Cost of sales ...Royalties ...Product development ...Advertising ...Amortization of intangibles ...Program production cost amortization ...Selling, distribution and administration ...Operating profit ...Interest expense ...Interest income...

  • Page 48
    ... date of July 8, 2013. The results of Backflip are reported in the Entertainment and Licensing segment. Consolidated net revenues for the year ended December 28, 2014 grew to $4,277,207 compared to $4,082,157 in 2013 and $4,088,983 in 2012. Most of the Company's net revenues and operating profits...

  • Page 49
    ... revenues from PLAY-DOH, PLAYSKOOL HEROES, specifically TRANSFORMERS RESCUE BOTS, and SESAME STREET, including BIG HUGS ELMO, products compared to 2012 were almost wholly offset by lower net revenues from TONKA and core PLAYSKOOL products. In 2013, the Company out-licensed the distribution of TONKA...

  • Page 50
    ...particularly SESAME STREET, MARVEL and STAR WARS. In 2013, higher net revenues from SESAME STREET, PLAY-DOH and PLAYSKOOL HEROES products, primarily related to the TRANSFORMERS brand, were more than offset by lower net revenues from core PLAYSKOOL and TONKA products. U.S. and Canada operating profit...

  • Page 51
    ... shipping and distribution costs. In 2013, operating profit decreased in dollars compared to 2012 as a result of lower net revenues and, to a lesser extent, higher product development and selling, distribution and administration expenses partially offset by lower advertising expense. 2013 operating...

  • Page 52
    ... This growth was partially offset by lower net revenues from LITTLEST PET SHOP and FURREAL FRIENDS products. FURBY products were introduced in English-speaking markets in 2012 and globally in 2013. In the preschool category, higher net revenues from franchise brands PLAY-DOH and TRANSFORMERS in 2014...

  • Page 53
    ...years ended December 28, 2014, December 29, 2013 and December 30, 2012, respectively, primarily related to employee severance charges, which impacted cost of sales, product development and selling, distribution and administration expenses. Furthermore, the Company also recognized pension curtailment...

  • Page 54
    ... cost of sales, product development and selling, distribution and administration expense for the year ended December 30, 2012. In total, these (benefits) expenses were recorded to the consolidated statements of operations as follows: 2014 2013 2012 Cost of sales ...Royalties ...Product development...

  • Page 55
    agreement with Disney. The Company will continue to incur these development costs related to these properties in 2015 in advance of the commencement of the license period and product shipments in 2016. Advertising expense in 2014 totaled $420,256 compared to $398,098 in 2013 and $422,239 in 2012. ...

  • Page 56
    ... generated a significant amount of cash from operations. In 2014 the Company funded its operations and liquidity needs primarily through cash flows from operations, and, when needed, using borrowings under its available lines of credit and its commercial paper program. During 2015, the Company...

  • Page 57
    ... and 2012 includes long-term royalty advance payments of $25,000 made to Hub Network in each of those two years. 2014 and 2013 also includes payments totaling approximately $60,000 and $175,000, respectively, of royalty advances paid to Disney related to license agreements for MARVEL and STAR WARS...

  • Page 58
    ... 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 included approximately $3,200 related to a forward-starting interest rate swap contract which...

  • Page 59
    ... part of the year. During 2014, 2013 and 2012, 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 provides for a commercial paper program (the "Program"). Under...

  • Page 60
    ... transaction costs, to repurchase the Company's common stock, respectively. During 2014, 2013 and 2012, the Company repurchased 8,490, 2,268 and 2,694 shares at an average price of $54.26, $45.17 and $37.11, respectively. At December 28, 2014, $64,151 remained under outstanding Board authorizations...

  • Page 61
    ... in the U.S. which are distributed on Discovery Family Channel, globally to other broadcasters and available on Netflix and iTunes, and success of our program-related toy, game and other merchandise. For the year ended December 28, 2014 we have $68,190 of program production costs included in other...

  • Page 62
    ...-step impairment test during the fourth quarter of 2014 for this reporting unit and concluded that there was no impairment as the estimated fair value exceeded its carrying value. Backflip's impairment test utilized cash flows expected to be generated from mobile gaming offerings, including releases...

  • Page 63
    ... 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 2014 pension expense was...

  • Page 64
    ... on the basis of their fair market value on the measurement date. These changes in the fair market value of plan assets impact the amount of future pension expense due to amortization of the unrecognized actuarial losses or gains. Income Taxes The Company's annual income tax rate is based on its...

  • Page 65
    ... expects to pay $50,000 in 2015 based on the anticipated theatrical release of STAR WARS: THE FORCE AWAKENS in December 2015. Purchase commitments represent agreements (including open purchase orders) to purchase inventory and tooling in the ordinary course of business. The reported amounts exclude...

  • Page 66
    ... first quarter of 2015. 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...

  • Page 67
    ... and compressed 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...

  • Page 68
    ...) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 26, 2015 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting. /s/ KPMG Providence, Rhode Island February 26, 2015 54

  • Page 69
    ... other comprehensive loss ...Treasury stock, at cost, 85,168,478 shares in 2014 and 78,640,228 shares in 2013 ...Total shareholders' equity ...Total liabilities, redeemable noncontrolling interests and shareholders' equity . . See accompanying notes to consolidated financial statements. 55 1,074,934...

  • Page 70
    ... Data) 2014 2013 2012 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 (income...

  • Page 71
    HASBRO, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Earnings Fiscal Years Ended in December (Thousands of Dollars) 2014 2013 2012 Net earnings ...Other comprehensive earnings (loss): Foreign currency translation adjustments ...Unrealized holding gains on available-for-sale ...

  • Page 72
    ... Dollars) 2014 2013 2012 Cash flows from operating activities Net earnings ...$ 413,310 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation of plant and equipment ...105,258 Amortization of intangibles ...52,708 Program production cost amortization ...47...

  • Page 73
    ... ...- 57,070 - Purchases of common stock ...- - - Stock-based compensation expense ...- 21,168 - Dividends declared ...- - (208,567) Distributions paid to - - - noncontrolling owners ...Balance, December 29, 2013 ...$104,847 734,181 3,432,176 Net earnings attributable to Hasbro, Inc...- - 415...

  • Page 74
    ... at least annually; more frequent reviews are performed based on the 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...

  • Page 75
    ... allowances for discounts, rebates and returns. 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 76
    ... assessment. The Company also performed quantitative two-step annual impairment tests related to its intangible assets with indefinite lives, as well as goodwill associated with Backflip Studios, the Company's majority owned mobile gaming reporting unit, in the fourth quarter of 2014 and no...

  • Page 77
    ... and handling of goods to customers as incurred. For 2014, 2013 and 2012, these costs were $157,326, $155,316 and $157,035, respectively, and are included in selling, distribution and administration expenses. Operating Leases Hasbro records lease expense on a straight-line basis inclusive of rent...

  • Page 78
    ... other retirement programs are being accrued currently over the period of active employment and are also included in pension expense. Hasbro has a contributory postretirement health and life insurance plan covering substantially all employees who retire under any of its United States defined benefit...

  • Page 79
    ... in United States and Hong Kong dollars as well as Euros. Further, the Company also used forward-starting interest rate swap agreements to hedge the interest payments related to the refinancing of the Company's long-term debt which came due in 2014. All contracts are entered into with a number of...

  • Page 80
    ... price, less shares which could have been purchased by 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 674, 760 and 3,409 for 2014, 2013 and 2012, respectively...

  • Page 81
    ... and Shares Except Per Share Data) At December 28, 2014, the Company had remaining net deferred gains on hedging instruments, net of tax, of $43,689 in AOCE. These instruments hedge payments related to inventory purchased in the fourth quarter of 2014 or forecasted to be purchased during 2015 and...

  • Page 82
    ... not be recoverable, the Company will perform an interim impairment test at that time. For the three fiscal years ended December 28, 2014, no such events occurred. The Company completed its annual impairment tests of goodwill in the fourth quarters of 2014, 2013 and 2012 concluding that there was no...

  • Page 83
    ... testing, these assets are allocated to the reporting units within the Company's operating segments. Changes in the carrying amount of goodwill, by operating segment, for the years ended December 28, 2014 and December 29, 2013 are as follows: U.S. and Canada International Entertainment and Licensing...

  • Page 84
    ... to Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) A summary of the Company's other intangibles, net at December 28, 2014 and December 29, 2013: 2014 2013 Acquired product rights ...Licensed rights of entertainment properties ...Accumulated...

  • Page 85
    ...U.S. to license certain types of programming developed by the Company based on its intellectual property. In the event the Network licenses the programming from the Company to air, it is required to pay the Company a license fee. As of December 28, 2014 and December 29, 2013 the Company's investment...

  • Page 86
    ... 28, 2014. During 2014, 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...

  • Page 87
    ...Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) based on market conditions and the ratings assigned to the notes by the credit rating agencies at the time of issuance. At December 28, 2014, the Company had notes outstanding under the Program of...

  • Page 88
    HASBRO, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) The carrying cost of the 6.125 % Notes Due 2014 included principal amounts of $425,000 as well as a fair value adjustment of $3,390 at December 29, 2013, ...

  • Page 89
    ... and Shares Except Per Share Data) Certain income tax (benefits) expenses, not reflected in income taxes in the consolidated statements of operations totaled $(38,223) in 2014, $6,733 in 2013 and $(31,682) in 2012 which relate primarily to stock options and pensions. In 2014, 2013 and 2012, the...

  • Page 90
    ... at December 28, 2014 and December 29, 2013 are: 2014 2013 Deferred tax assets: Accounts receivable ...Inventories ...Loss and credit carryforwards ...Operating expenses ...Pension ...Other compensation ...Postretirement benefits ...Interest rate hedge ...Tax sharing agreement ...Other ...Gross...

  • Page 91
    ... of operations. At December 28, 2014, December 29, 2013 and December 30, 2012, the Company had accrued potential interest and penalties of $4,042, $24,547 and $20,377, respectively. The Company and its subsidiaries file income tax returns in the United States and various state and international...

  • Page 92
    ... the Company's common stock. In 2014, the Company repurchased 8,490 shares at an average price of $54.26. The total cost of these repurchases, including transaction costs, was $460,840. At December 28, 2014, $64,151 remained under the current authorizations. In February 2015, the Company's Board of...

  • Page 93
    ...are predominantly based on underlying investments which are traded on an active market; investments are redeemable within 45 days. At December 29, 2013 the Company also held an available-for-sale investment in Brazil similar to a repurchase agreement; this investment was valued at the principal plus...

  • Page 94
    ... follows: 2014 2013 2012 Cost of sales ...Product development ...Selling, distribution and administration ...Income tax benefit ... $ 395 3,874 31,883 36,152 11,745 152 1,767 19,353 21,272 7,065 14,207 146 1,854 17,434 19,434 6,392 13,042 $24,407 Restricted Stock Units The Company on occasion...

  • Page 95
    ... is 29 months. 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, both tranches met the accounting definition for grant date and, as such, are being...

  • Page 96
    HASBRO, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) Stock Performance Awards In 2014, 2013 and 2012, as part of its annual equity grant to executive officers and certain other employees, the Company issued ...

  • Page 97
    ... compensation cost related to stock options was $6,599 and the weighted average period over which this will be expensed is 21 months. Non-Employee Awards In 2014, 2013 and 2012, the Company granted 34, 33 and 44 shares of common stock, respectively, to its non-employee members of its Board...

  • Page 98
    ... cost of $1,834 was recorded in selling, distribution and administration expense in the year ended December 28, 2014 and $1,560 in each year in the two-year period ended December 29, 2013. Cash-Settled Restricted Stock Units In 2011 and 2010, the Company granted awards to certain employees...

  • Page 99
    ... 28, 2014 and December 29, 2013. Pension 2014 2013 Postretirement 2014 2013 Change in Projected Benefit Obligation Projected benefit obligation - beginning ...Service cost ...Interest cost ...Actuarial (gain) loss ...Curtailment ...Plan amendment ...Benefits paid ...Settlements ...Expenses paid...

  • Page 100
    HASBRO, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) In fiscal 2015, the Company expects amortization of unrecognized net losses and unrecognized prior service cost related to its defined benefit pension plans ...

  • Page 101
    HASBRO, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) Level 1 assets consist of investments traded on active markets that are valued using published closing prices. The Plans' Level 2 assets primarily consist of...

  • Page 102
    ...to Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) For 2014, 2013 and 2012, the Company measured the assets and obligations of the Plans as of the fiscal year-end. The following is a detail of the components of the net periodic benefit cost for...

  • Page 103
    ...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 under such arrangements, net of sublease income which is not material, for 2014, 2013...

  • Page 104
    ... unit, are primarily denominated in United States and Hong Kong dollars, and Euros. Further, during the fourth quarter of 2013 and first half of 2014 Hasbro used forward-starting interest rate swap agreements to hedge anticipated interest payments. All contracts are entered into with a number...

  • Page 105
    ... 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 106
    HASBRO, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) interest rate swap agreements were increased to $500,000. The instruments were settled on the date of the issuance of the related debt in May 2014 and a ...

  • Page 107
    ...products, electronic interactive products, toy-related specialty products, traditional board games and puzzles, and trading card and role-playing games primarily within the United States and Canada. Within the International segment, the Company markets and sells both toy and game products in markets...

  • Page 108
    .... 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 2014 U.S. and Canada ...International ...Entertainment and Licensing ...Global...

  • Page 109
    ... 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 110
    ... 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 111
    ... Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) 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...

  • Page 112
    ...2014. Based on the evaluation of these disclosure 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...

  • Page 113
    ...operations, comprehensive earnings, cash flows and shareholders' equity for each of the fiscal years in the three-year period ended December 28, 2014, and our report dated February 26, 2015 expressed an unqualified opinion on those consolidated financial statements. /s/ KPMG Providence, Rhode Island...

  • Page 114
    ...Investors, Corporate Governance tabs. The Company's website address is http://www.hasbro.com. Although the Company does not generally intend to provide waivers of or amendments to the Code of Conduct for its Chief Executive Officer, Chief Financial Officer, Controller, or other officers or employees...

  • Page 115
    ... Information Regarding Independent Registered Public Accounting Firm" in the Company's definitive proxy statement for the 2015 Annual Meeting of Shareholders and is incorporated herein by reference. PART IV Item 15. Exhibits, Financial Statement Schedules. (a) Consolidated Financial Statements...

  • Page 116
    ... 3.1 to the Company's Current Report on Form 8-K dated August 6, 2014, File No. 1-6682.) (f) Certificate of Designations of Series C Junior Participating Preference Stock of Hasbro, Inc. dated June 29, 1999. (Incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for...

  • Page 117
    ...the Securities Exchange Act of 1934, as amended.) (Incorporated by reference to Exhibit 10(h) to the Company's Annual Report on Form 10-K for the period ended December 25, 2011, File No. 1-6682.) (i) Amendment, dated July 19, 2013, to License Agreements by and between Hasbro, Inc., Marvel Characters...

  • Page 118
    ... 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.) (o) Hasbro, Inc. Retirement Plan for...

  • Page 119
    ... Company's Current Report on Form 8-K dated as of August 6, 2014, File No. 1-6682.) Form of Restricted Stock Unit Agreement under the Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan. (Applicable to Duncan Billing, John Frascotti, Wiebe Tinga and Deborah Thomas and certain other employees...

  • Page 120
    ... Stock Unit Agreement under the Hasbro, Inc. Restated Stock Incentive Performance Plan for Brian Goldner. (Incorporated by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the period ended March 30, 2014, File No. 1-6682.) (nn) Restricted Stock Unit Agreement, dated...

  • Page 121
    ....PRE 101.DEF Statement re computation of ratios. Subsidiaries of the registrant. Consent of KPMG LLP. Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) under the...

  • Page 122
    ... Firm The Board of Directors and Shareholders Hasbro, Inc.: Under date of February 26, 2015, we reported on the consolidated balance sheets of Hasbro, Inc. and subsidiaries as of December 28, 2014 and December 29, 2013, and the related consolidated statements of operations, comprehensive earnings...

  • Page 123
    ... (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: 2014 ...2013 ...2012 ... $19,000 $19,600 $23,700 800 - (1,200...

  • Page 124
    ... by the undersigned, thereunto duly authorized. HASBRO, INC. (Registrant) By: /s/ Brian D. Goldner Brian D. Goldner President and Chief Executive Officer Date: February 26, 2015 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following...

  • Page 125
    Signature Title Date /s/ Alan G. Hassenfeld Director February 26, 2015 Alan G. Hassenfeld /s/ Tracy A. Leinbach Director February 26, 2015 Tracy A. Leinbach /s/ Edward M. Philip Director February 26, 2015 Edward M. Philip /s/ Richard S. Stoddart Director February 26, 2015 Richard S. ...

  • Page 126
    ...00 a.m. on Thursday, May 21, 2015 at: Hasbro's Corporate Office 1027 Newport Avenue Pawtucket, Rhode Island 02861 Direct Stock purchase and Dividend Reinvestment plan Under this plan, interested investors may purchase their initial shares and existing Hasbro shareholders may reinvest their dividends...

  • Page 127
    1027 Newport Avenue Pawtucket, Rhode Island 02861 hasbro.com 002CSN36A0