Hasbro 2014 Annual Report Download - page 65

Contractual Obligations and Commercial Commitments
In the normal course of its business, the Company enters into contracts related to obtaining rights to produce
product under license, which may require the payment of minimum guarantees, as well as contracts related to the
leasing of facilities and equipment. In addition, the Company has $1,559,895 in principal amount of long-term
debt outstanding at December 28, 2014. Future payments required under these and other obligations as of
December 28, 2014 are as follows:
Payments due by Fiscal Year
Certain Contractual Obligations 2015 2016 2017 2018 2019 Thereafter Total
Long-term debt ............... $ — — 350,000 — — 1,209,895 1,559,895
Interest payments on long-term
debt ...................... 85,803 85,803 85,803 63,753 63,753 1,109,903 1,494,818
Operating lease commitments . . . 35,405 27,621 20,569 17,586 15,785 23,456 140,422
Future minimum guaranteed
contractual royalty
payments .................. 17,238 37,387 57,209 55,959 52,209 25,570 245,572
Tax sharing agreement ......... 4,900 6,400 6,700 7,000 7,600 57,100 89,700
Purchase commitments ......... 295,244———— —295,244
$438,590 157,211 520,281 144,298 139,347 2,425,924 3,825,651
Included in other liabilities in the consolidated balance sheets at December 28, 2014, the Company has a
liability, including potential interest and penalties, of $39,458 for uncertain tax positions that have been taken or
are expected to be taken in various income tax returns. The Company does not know the ultimate resolution for
remaining uncertain tax positions and as such, does not know the ultimate timing of payments related to this
liability. Accordingly, these amounts are not included in the table above.
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. 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. Accordingly, estimates of these amounts are included in the table above.
In July 2013, the Company acquired a 70% stake in Backflip and 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%.
The table above excludes up to $110,000 in guaranteed royalties related to the Company’s license
agreement with Disney related to MARVEL as such amounts are contingent on the quantity and type of theatrical
movie releases and may be payable during the next six years. Approximately $40,000 of these additional
royalties are expected to be paid in 2015 based on expected qualifying theatrical releases.
The table above also excludes $150,000 in guaranteed royalties related to the Company’s license agreement
with Disney related to STAR WARS as the amount and timing of such payments are due in accordance with the
anticipated releases of new STAR WARS theatrical releases. The Company 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 inventory and tooling purchase
liabilities included in accounts payable or accrued liabilities on the consolidated balance sheets as of
December 28, 2014.
In addition to the amounts included in the table above, the Company expects to make contributions totaling
approximately $4,000 related to its unfunded U.S. and other International pension plans in 2015. The Company also
has letters of credit and related instruments of approximately $167,117 at December 28, 2014. Letters of credit and
51