Hasbro 2014 Annual Report Download - page 83

HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements — (Continued)
(Thousands of Dollars and Shares Except Per Share Data)
A portion of the Company’s goodwill and other intangible assets reside in the Corporate segment of the
business. For purposes of the goodwill impairment 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 Total
2014
Balance at December 29, 2013 ............. $296,978 171,736 125,607 594,321
Foreign exchange translation .............. — (883) — (883)
Balance at December 28, 2014 ............. $296,978 170,853 125,607 593,438
2013
Balance at December 30, 2012 ............. $296,978 171,451 6,496 474,925
Acquired during the period ................ — — 119,111 119,111
Foreign exchange translation .............. — 285 — 285
Balance at December 29, 2013 ............. $296,978 171,736 125,607 594,321
On July 8, 2013, the Company acquired a majority interest in Backflip Studios, LLC (“Backflip”), a mobile
game developer based in Boulder, Colorado. The Company paid $112,000 in cash to acquire a 70% interest 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 is consolidating the financial
statements of Backflip and reporting the 30% redeemable noncontrolling interests as a separate line in the
consolidated balance sheets and statements of operations.
Based on a valuation of approximately $160,000, the Company has allocated approximately $6,000 to net
tangible assets, $35,000 to identifiable intangible assets, $119,000 to goodwill, and $48,000 to redeemable
noncontrolling interests. The valuation was based on the income approach which utilizes discounted future cash
flows expected to be generated from the acquired business. Identifiable intangible assets include property rights
which are being amortized over the projected revenue curve over a period of four years. Actual results achieved
from these acquired game titles may impact the carrying value of these intangibles or the timing of amortization
expense. Goodwill reflects the value to the Company from leveraging Backflip’s expertise in developing and
marketing mobile digital games, including the continued expansion of its own brands in this arena. Goodwill is
tested for impairment annually unless an event occurs or circumstances change that indicate that the carrying
value may not be recoverable. The Company completed its two-step quantitative impairment test of this reporting
unit during the fourth quarter of 2014 and concluded there was no impairment.
The value of the redeemable noncontrolling interests has been presented in the consolidated balance sheets
as temporary equity between liabilities and shareholders’ equity. This presentation is required because the
Company has the obligation to purchase the remaining 30% of Backflip in the future contingent on the
achievement by Backflip of certain predetermined financial metrics. At December 28, 2014 and December 29,
2013, this 30% redeemable noncontrolling interest was $42,730 and $45,445, respectively.
The consolidated statements of operations for the year ended December 29, 2013 included the operations of
Backflip from the closing date of July 8, 2013 whereas full year operations are included in the consolidated
statements of operations for the year ended December 28, 2014. Actual and pro forma results have not been
disclosed because they are not material to the consolidated financial statements. Net loss attributable to
noncontrolling interests for the years ended December 28, 2014 and December 29, 2013 was $2,620 and $2,270
respectively.
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