Hasbro 2014 Annual Report Download - page 84

HASBRO, INC. AND SUBSIDIARIES
Notes 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 .......................................... $789,781 788,544
Licensed rights of entertainment properties ........................... 256,555 256,555
Accumulated amortization ........................................ (797,546) (744,838)
Amortizable intangible assets ...................................... 248,790 300,261
Product rights with indefinite lives .................................. 75,738 75,738
Total other intangibles, net ........................................ $324,528 375,999
Intangible assets, other than those with indefinite lives, are reviewed for indications of impairment
whenever events or changes in circumstances indicate the carrying value may not be recoverable. During 2013,
the Company incurred $19,736 in impairment charges related to certain product lines which the Company exited
as well as product lines with reduced expectations. The Company will continue to incur amortization expense
related to the use of acquired and licensed rights to produce various products. A portion of the amortization of
these product rights will fluctuate depending on brand activation, related revenues during an annual period and
future expectations, as well as rights reaching the end of their useful lives. The Company currently estimates
amortization expense related to the above intangible assets for the next five years to be approximately:
2015 ..................................................................... $44,000
2016 ..................................................................... 35,000
2017 ..................................................................... 33,000
2018 ..................................................................... 24,000
2019 ..................................................................... 40,000
(5) Equity Method Investment
The Company owns an interest in a joint venture, Hub Television Networks, LLC (the “Network”), with
Discovery Communications, Inc. (“Discovery”). The Company has determined that it does not meet the control
requirements to consolidate the Network and accounts for the investment using the equity method of accounting.
The Network was established to create a cable television network in the United States dedicated to high-quality
children’s and family entertainment. In October 2009, the Company purchased an initial 50% share in the
Network for a payment of $300,000 and certain future tax payments based on the value of certain tax benefits
expected to be received by the Company. On September 23, 2014, the Company and Discovery amended their
relationship with respect to the Network and Discovery has increased its equity interest in the Network to 60%
while the Company retains a 40% equity interest in the Network. The change in equity interests was
accomplished partly through a redemption of interests owned by the Company and partly through the purchase of
interests by Discovery from the Company. In connection with this reduction in its equity ownership the Company
was paid a cash purchase price of $64,400 by Discovery. In connection with the restructuring of the Network, the
Company recognized a net expense of $28,326, which includes a charge resulting from an option agreement and
the Company’s share of severance charges and programming write-downs recognized by the Network, partially
offset by a gain from the reduction of amounts due to Discovery under a tax sharing agreement and is primarily
included in other (income) expense, net in the consolidated statements of operations.
In connection with amendments, the Company and Discovery also entered into an option agreement related
to the Company’s remaining 40% ownership in the Network, exercisable during the one-year period following
December 31, 2021. The exercise price of the option agreement is based upon 80% of the then fair market value
70