Hasbro 2014 Annual Report Download - page 107

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HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)
In addition to the above commitments, certain of the above contracts impose minimum marketing
commitments on the Company. The Company may be subject to additional royalty guarantees totaling $260,000
that are not included in the amounts above that may be payable during the next six years contingent upon the
quantity and types of theatrical movie releases by the licensor.
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 sharing agreement. The Company estimates these
payments may total approximately $89,700 and may range from approximately $4,900 to $7,600 per year during
the period 2015 to 2019, and approximately $57,100 in aggregate for all years occurring thereafter. These
payments are contingent upon the Company having sufficient taxable income to realize the expected tax
deductions of certain amounts related to the joint venture.
In connection with the Company’s purchase of a majority stake in Backflip, the Company will be required
to purchase the remaining 30% in the future contingent on the achievement by Backflip of certain predetermined
financial performance metrics. The Company does not know the ultimate timing that these predetermined
financial performance metrics may be met and, thereby, cannot currently estimate the purchase price of the
remaining 30%. See note 4 for additional discussion.
At December 28, 2014, the Company had approximately $295,244 in outstanding inventory and tooling
purchase commitments.
Hasbro is party to certain legal proceedings, as well as certain asserted and unasserted claims. Amounts
accrued, as well as the total amount of reasonably possible losses with respect to such matters, individually and
in the aggregate, are not deemed to be material to the consolidated financial statements.
(18) Segment Reporting
Segment and Geographic Information
Hasbro is a worldwide leader in children’s and family leisure time products and services with a broad
portfolio of brands and entertainment properties across toys, games and licensed products ranging from
traditional to high-tech and digital, and film and television entertainment. The Company’s segments are (i) U.S.
and Canada, (ii) International, (iii) Entertainment and Licensing, and (iv) Global Operations.
The U.S. and Canada segment includes the marketing and selling of boys’ action figures, vehicles and
playsets, girls’ toys, electronic toys and games, plush products, preschool toys and infant 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 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. The Global Operations segment is responsible for manufacturing and sourcing finished products for
the Company’s U.S. and Canada and International segments.
Segment performance is measured at the operating profit level. Included in Corporate and eliminations are
certain corporate expenses, including substantially all costs incurred related to the 2013 and 2012 business
restructurings, the elimination of intersegment transactions and certain assets benefiting more than one segment.
Intersegment sales and transfers are reflected in management reports at amounts approximating cost. Certain
shared costs, including global development and marketing expenses and corporate administration, are allocated
to segments based upon expenses and foreign exchange rates fixed at the beginning of the year, with adjustments
to actual expenses and foreign exchange rates included in Corporate and eliminations. The accounting policies of
the segments are the same as those referenced in note 1.
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