Hasbro 2014 Annual Report Download - page 43

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the audited consolidated financial statements of
the Company included in Part II Item 8 of this document.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains
forward-looking statements concerning the Company’s expectations and beliefs. See Item 1A “Forward-Looking
Information and Risk Factors That May Affect Future Results” for a discussion of other uncertainties, risks and
assumptions associated with these statements.
Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in thousands of
dollars or shares, except for per share amounts.
EXECUTIVE SUMMARY
Hasbro, Inc. (“Hasbro” or the “Company”) is a global company committed to Creating the World’s Best
Play Experiences. The Company strives to do this through deep consumer engagement and the application of
consumer insights, the use of immersive storytelling to build brands, product innovation and development of
global business reach. Hasbro applies these principles to leverage its beloved owned 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 fulfills the
fundamental need for play and connection for children and families around the world. The Company’s wholly
owned Hasbro Studios creates entertainment brand-driven storytelling across mediums, including television, film
and more. These illustrate successful execution of its brand blueprint.
At the center of this blueprint, Hasbro re-imagines, re-invents and re-ignites its owned and controlled brands
and imagines, invents and ignites new brands, through toy and game innovation, immersive entertainment
offerings, including television programming and motion pictures, and a broad range of licensed products, ranging
from traditional to high-tech, under well-known brand names structured within the Company’s brand architecture
and offering consumers the ability to experience the Company’s brands in all areas of their lives.
To accomplish these objectives, the Company offers consumers the ability to experience its branded play
through innovative toys and games, digital media, lifestyle licensing and publishing and entertainment, including
television programming and motion pictures. The Company’s focus remains on growing its owned and controlled
brands and the brands of its partners, developing new and innovative products and brands which respond to
market insights, offering entertainment experiences which allow consumers to experience the Company’s brands
across multiple forms and formats, and optimizing efficiencies within the Company to increase operating
margins and maintain a strong balance sheet.
Hasbro earns revenue and generates cash primarily through the sale of a broad variety of toy and game
products and distribution of television programming based on the Company’s properties, as well as through the
out-licensing of rights for use of its properties in connection with complementary products, including digital
media and games and lifestyle products, offered by third parties, or in certain situations, toy products where the
Company considers the out-licensing of brands to be more effective. The Company’s brand architecture includes
franchise brands, key partner brands, challenger brands, gaming mega brands and new brands. The Company’s
franchise and challenger brands represent Company-owned brands or brands which if not entirely owned are
broadly controlled by the Company, and have been successful over the long term. Franchise brands are the
Company’s most significant owned or controlled brands which it believes have the ability to deliver significant
revenue over the long-term. Challenger brands are brands which have not yet achieved franchise brand status, but
have the potential to do so with investment and time. The Company’s franchise brands are LITTLEST PET
SHOP, MAGIC: THE GATHERING, MONOPOLY, MY LITTLE PONY, NERF, PLAY-DOH and
TRANSFORMERS, while challenger brands include BABY ALIVE, FURREAL FRIENDS, FURBY, KRE-O,
PLAYSKOOL and PLAYSKOOL HEROES. The Company has a large portfolio of owned and controlled brands
which can be introduced in new forms and formats over time. These brands may also be further extended by
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