Hasbro 2015 Annual Report Download

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2015 Annual Report

Table of contents

  • Page 1
    2015 Annual Report

  • Page 2
    ... of "Creating the World's Best Play Experiences." Throug our focus on building global Through brand franchises, f we have redefined our compa any and built the capabilities to successfully execute our strategy. T oday y, we have global teams not only deve eloping innovative toys and games, but en...

  • Page 3
    ...we are building our brands and differentiating Hasbro from the competition. Toy & Game Product Innovation Storytelling Digital Media HASBRO BRANDS Consumer Insights Immersive Entertainment E t Experiences Strategic Retail Partnerships Consumer Products Global Markets • Developed • Developing...

  • Page 4
    ...$2 billion at retail. Last year I outlined for you the 2010 relaunch of MY LITTLE PONY through television programming and how we are successfully building this brand by executing around the Brand Blueprint. In 2015, MY LITTLE PONY was our top licensed brand. Through the development of characters and...

  • Page 5
    ... and for the development of larger budget films such as TRANSFORMERS 5 slated for release in June 2017. We are now better positioned to work with these partners on the marketing and Great stories were a significant driver in 2015, for both Hasbro brands and our Partner Brands. STAR WARS, MARVEL and...

  • Page 6
    ...the future. Supported by our guiding principles, a commitment to our people, the global execution of our Brand Blueprint and our values, Hasbro is connecting with more people in more ways than ever before. Our task of being the "World's Best" is built on a strong corporate social responsibility (CSR...

  • Page 7
    ... immersive entertainment is directly correlated to capitalizing on this trend to build global brand franchises. *Source: NPD POS Data. 80% market coverage (U.S.); Entertainment: TV/DVD/Digital, movie, Video Digital Games Total Market Size US$B, 2015F U.S. & Canada Europe & Africa Asia Pacific Latin...

  • Page 8
    ...Financial Officer Duncan J. Billing Executive Vice President, Chief Global Operations and Business Development Officer Barbara Finigan Executive Vice President Chief Legal Officer and Corporate Secretary John A. Frascotti President, Hasbro Brands Wiebe Tinga Executive Vice President Chief Commercial...

  • Page 9
    ... of the Company's Common Stock is not necessarily indicative of future performance. $250 $218 $200 $185 $204 $181 $182 Indexed Stock Price $156 $163 $150 $129 $124 $117 $105 $131 $100 $100 $103 $78 $69 $50 $0 2010 Hasbro, Inc. 2011 2012 S&P 500 2013 2014 2015 Russell 1000...

  • Page 10
    ...27, 2015 Commission file number 1-6682 Hasbro, Inc. (Exact Name of Registrant, As Specified in its Charter) Rhode Island (State of Incorporation) 05-0155090 (I.R.S. Employer Identification No.) 1027 Newport Avenue, Pawtucket, Rhode Island (Address of Principal Executive Offices) 02861 (Zip Code...

  • Page 11
    ... Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain Relationships and Related Transactions, and Director Independence ...Principal Accountant Fees and Services ...PART IV Exhibits, Financial Statement...

  • Page 12
    ... build our brands, product innovation and development of global business reach. We apply these principles to leverage our beloved owned and controlled brands, including LITTLEST PET SHOP, MAGIC: THE GATHERING, MONOPOLY, MY LITTLE PONY, NERF, PLAY-DOH and TRANSFORMERS, as well as the licensed brands...

  • Page 13
    ...year of our license agreement with The Walt Disney Company ("Disney") to market DISNEY PRINCESS and FROZEN small and fashion doll product lines. Partner brands MARVEL, STAR WARS, DISNEY'S DESCENDANTS, DISNEY PRINCESS and FROZEN are all owned by Disney. In 2015, Hasbro sold product supported by three...

  • Page 14
    ... WORLD. In addition to marketing and developing traditional action figures and accessories for these entertainment brands, the Company also develops and markets products designed for collectors, which has been a key component of the success of the TRANSFORMERS, STAR WARS and MARVEL brands. Games...

  • Page 15
    ... Brand offerings in the preschool category include MY LITTLE PONY, TRANSFORMERS and PLAY-DOH, including modeling compound and playsets. Our offerings also include preschool product lines based on those aforementioned licensed entertainment properties, including JURASSIC WORLD, MARVEL and STAR WARS...

  • Page 16
    ...our consumer products licensing, digital gaming, television and movie entertainment operations. Our consumer products licensing category seeks to promote our brands through the out-licensing of our intellectual properties to third parties for promotional and merchandising uses in businesses which do...

  • Page 17
    ...During 2015, we utilized cash from our operations, borrowings under our commercial paper program and uncommitted lines of credit to meet our cash flow requirements. Product Development and Royalties Our success is dependent on continuous innovation in our branded-play and entertainment offerings and...

  • Page 18
    ... well as costs related to the amendment of the Company's license agreement with Zynga. Our royalty expense in any given year may also vary depending upon the timing of movie releases and other entertainment media. Marketing and Sales While our global development function focuses on brand and product...

  • Page 19
    ... business is highly competitive. We compete with several large toy and game companies in our product categories, as well as many smaller United States and international toy and game designers, manufacturers and marketers. We also compete with other companies that offer branded entertainment specific...

  • Page 20
    ... by the manufacturer of articles that are banned. Consumer product safety laws also exist in some states and cities within the United States and in many international markets including Canada, Australia and Europe. We utilize independent third party laboratories that employ testing and other...

  • Page 21
    ..., Latin America, Asia Pacific and Emerging Markets from 2006 to 2012. Availability of Information Our internet address is http://www.hasbro.com. We make our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished...

  • Page 22
    ... to continue building our brands across the blueprint. In 2015 revenues from our seven franchise brands, LITTLEST PET SHOP, MAGIC: THE GATHERING, MONOPOLY, NERF, MY LITTLE PONY, PLAY-DOH and TRANSFORMERS, totaled 52% of our aggregate net revenues. Our key partner brands, including DISNEY, MARVEL and...

  • Page 23
    ... of media development, release dates and the ultimate consumer interest in and success of these media efforts. For 2016 we are developing and marketing significant product lines tied to the scheduled motion picture releases by key partners of CAPTAIN AMERICA: CIVIL WAR, MOANA, ROGUE ONE: A STAR WARS...

  • Page 24
    ...media releases or even lead to their cancellation. Any delay or cancellation of planned product development work, introductions, or media support may decrease the number of products we sell and harm our business. Lack of sufficient consumer interest in entertainment media for which we offer products...

  • Page 25
    ... our profitability. In recent years, retailers have also developed their own private-label products that directly compete with the products of traditional manufacturers and brand owners. Some retail chains that are our customers sell privatelabel children's and family entertainment products designed...

  • Page 26
    ... of laws and regulations that impact our product offerings and related enforcement; • Potential challenges to our transfer pricing determinations and other aspects of our cross border transactions; • Difficulties understanding the retail climate, consumer trends, local customs and competitive...

  • Page 27
    ... owned by third parties. We currently have in-licenses to several successful entertainment properties, including MARVEL and STAR WARS, each owned by Disney. These licenses typically have multi-year terms and provide us with the right to market and sell designated classes of products. In recent years...

  • Page 28
    ... customers could negatively impact our revenues and profitability. Part of our strategy to remain relevant to children and families is to offer innovative products incorporating progressive technology, integrating digital and analog play. These products can be more difficult and expensive to design...

  • Page 29
    ... key business strategy to expand our presence in emerging and underserved international markets. Additionally, as we discuss below, we utilize third-party manufacturers located in the Far East to produce our products. These sales and manufacturing operations, including operations in emerging markets...

  • Page 30
    ... properties developed by third parties and licensed to us. The success of entertainment properties for which we have a license, such as MARVEL, STAR WARS, SESAME STREET, DISNEY PRINCESS, FROZEN , TROLLS or YOKAI-WATCH related products, can significantly affect our revenues and profitability. If...

  • Page 31
    ... Global Business Ethics Principles address a number of issues, including working hours and compensation, health and safety, and abuse and discrimination. In addition, we require that our products supplied by third-party manufacturers be produced in compliance with all applicable laws and regulations...

  • Page 32
    ...gaming. Our strategy also involves making changes in how we design and develop our gaming products. We recognize the need to provide immersive game play that is easy for consumers to learn and play in shorter periods of time, as well as offer innovative face to face, off the board and digital gaming...

  • Page 33
    ... been internally developed and has no carrying value on our consolidated balance sheets. However, as of December 27, 2015, we had $280.8 million of acquired product and licensing rights included in other assets on our consolidated balance sheets. Declines in the profitability of the acquired brands...

  • Page 34
    ... of direct costs of the recall, may harm consumer perceptions of our products and have a negative impact on our future revenues and results of operations. Governments and regulatory agencies in the markets where we manufacture and sell products may enact additional regulations relating to product...

  • Page 35
    ...our business or reduce our sales or profitability. We rely extensively on various information technology systems and software applications to manage many aspects of our business, including product development, management of our supply chain, sale and delivery of our products, financial reporting and...

  • Page 36
    ... 2. Properties. Hasbro owns its corporate headquarters in Pawtucket, Rhode Island consisting of approximately 343,000 square feet, which is used by corporate functions as well as the Global Operations and Entertainment and Licensing segments. The Company also owns an adjacent building consisting of...

  • Page 37
    ... The primary locations for facilities in the International segment are in Australia , Brazil, France, Germany, Hong Kong, Mexico, Russia, Spain, the People's Republic of China, and the United Kingdom, all of which are comprised of both office and warehouse space. In addition, the Company also leases...

  • Page 38
    ...as reported on the Composite Tape of The NASDAQ Global Select Market as well as the cash dividends declared per share of Common Stock for the periods listed. Period Sales Prices High Low Cash Dividends Declared 2015 1st Quarter ...2nd Quarter ...3rd Quarter ...4th Quarter ...2014 1st Quarter ...2nd...

  • Page 39
    ... the Company's stock. The Company may suspend or discontinue the program at any time and there is no expiration date. Item 6. Selected Financial Data. Fiscal Year 2013 (Thousands of dollars and shares except per share data and ratios) 2015 2014 2012 2011 Consolidated Statements of Operations Data...

  • Page 40
    ... Canada. The International segment consists of the Company's European, Asia Pacific and Latin and South American toy and game marketing and sales operations. The Company's Entertainment and Licensing segment includes the Company's consumer products licensing, digital licensing and gaming, and movie...

  • Page 41
    ..., MY LITTLE PONY, NERF and PLAY-DOH was only partially offset by declines from TRANSFORMERS and to a lesser extent, LITTLEST PET SHOP. • Growth from the Boys, Games and Preschool categories in 2015 compared to 2014 was partially offset by declines in the Girls category, both as reported and...

  • Page 42
    ... diluted share, related to a gain on the sale of the Company's manufacturing operations in East Longmeadow, MA and Waterford, Ireland. 2014 • Benefit, net of tax, of $23.9 million, or $0.18 per diluted share, related to a gain on the sale of intellectual property license rights. • Net benefit of...

  • Page 43
    ... are a number of entertainment-based brands which, from year to year, may be supported by major theatrical releases. As such, boys' category net revenues by brand fluctuate from year-toyear depending on movie popularity, release dates and related product line offerings and success. In 2015, three...

  • Page 44
    ... games brands, primarily DUEL MASTERS, ANGRY BIRDS and TWISTER. Girls The girls category grew 2% in 2014 compared to 2013, primarily related to higher net revenues from Franchise Brands, MY LITTLE PONY and NERF REBELLE, partially offset by lower net revenues from Franchise Brand LITTLEST PET SHOP...

  • Page 45
    ... the successful television program, MY LITTLE PONY: FRIENDSHIP IS MAGIC, as well as the third quarter 2013 introduction of MY LITTLE PONY EQUESTRIA GIRLS fashion doll products which were supported by animated movie releases in both 2013 and 2014. NERF REBELLE, a line of action performance products...

  • Page 46
    ... than offset by lower net revenues from DUEL MASTERS and TWISTER, and certain other game brands. In the girls' category, higher net revenues from Franchise Brands LITTLEST PET SHOP, MY LITTLE PONY, NERF and PLAY-DOH, as well as higher net revenues from FURREAL FRIENDS, were more than offset by an...

  • Page 47
    ..., higher net revenues from Franchise Brand NERF and Partner Brands JURASSIC WORLD, MARVEL and STAR WARS were slightly offset by expected lower net revenues from TRANSFORMERS products, which, in 2014, were supported by a major theatrical release. In the games category, higher net revenues from...

  • Page 48
    ... 11% in 2015 compared to 2014. Higher entertainment revenues related to a multi-year digital distribution agreement for Hasbro Studios programming as well as slightly higher net revenues from the Company's consumer product and digital gaming licensing groups were only partially offset by lower...

  • Page 49
    ... The Company's operating expenses, stated as percentages of net revenues, are illustrated below for each year in the three fiscal years ended December 27, 2015: 2015 2014 2013 Cost of sales ...Royalties ...Product development ...Advertising ...Amortization of intangibles ...Program production cost...

  • Page 50
    ... of 2013 the Company amended its license agreement with Zynga which resulted in additional royalty expense of $20.9 million. In total, these (benefits) expenses were recorded to the consolidated statements of operations as follows: 2015 2014 2013 Cost of sales ...Royalties ...Product development...

  • Page 51
    ...-bearing products may be partially offset by higher royalty expense. In 2015, the following entertainment-driven, royalty-bearing brands were supported by major theatrical releases: JURASSIC WORLD, MARVEL and STAR WARS. Likewise, revenue mix reflects higher net revenue contributions from the Company...

  • Page 52
    ... level of partner brand net revenues, as well as the increase in Entertainment and Licensing segment net revenues. Entertainment-backed product lines generally require less in advertising by the Company. Advertising expense was consistent as a percentage of net revenues in 2014 and 2013 at 9.8% of...

  • Page 53
    ... to Discovery under a tax sharing agreement. • In August 2015, the Company finalized the sale of its manufacturing operations in East Longmeadow, MA and Waterford, Ireland which resulted in the recognition of a gain of $6.6 million in other (income) expense, net. • The 2014 gain on the sale of...

  • Page 54
    ... tax rate from 2013 to 2014 and decrease from 2014 to 2015 primarily reflect the change in the geographic mix of where the company earned its profits. OTHER INFORMATION In May 2014, the Financial Accounting Standards Board ("FASB"), issued ASU No. 2014-09, Revenue from Contracts with Customers (ASC...

  • Page 55
    ... cash flows in 2015, 2014 and 2013 included $42.5 million, $31.4 million and $41.3 million, respectively, of cash used for television program and film production. Cash from operations in 2013 includes a final long-term royalty advance payment of $25.0 million made to Discovery Family Channel. 44

  • Page 56
    ... related to the sale of the Company's manufacturing operations were more than offset by lower royalty advances and non-income based tax receivables, primarily valued added taxes in Europe. Prepaid expenses and other current assets increased approximately 18% in 2014 compared to 2013, primarily...

  • Page 57
    ... payment related to an existing intellectual property. The Company commits to inventory production, advertising and marketing expenditures prior to the peak fourth quarter retail selling season. Accounts receivable increase during the third and fourth quarter as customers increase their purchases to...

  • Page 58
    ...to guaranteed royalty payments of approximately $83.6 million in 2016, including $40.0 million contingent on theatrical movie releases. CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES The Company prepares its consolidated financial statements in accordance with accounting principles generally...

  • Page 59
    statements and the reported amounts of revenues and expenses for the periods presented. The significant accounting policies which management believes are the most critical to aid in fully understanding and evaluating the Company's reported financial results include sales allowances, program ...

  • Page 60
    ... brand and to develop and market games based on Hasbro brands. Because Backflip was a recent acquisition and to date has been investment spending in anticipation of 2016 game releases, the Company performed the quantitative twostep impairment test during the fourth quarter of 2015 for this reporting...

  • Page 61
    ... rates of return at the measurement date on high quality corporate bond investments currently available and expected to be available during the period to maturity of the pension benefits. The Company's weighted average discount rate for its U.S. plans used for the calculation of 2015 pension expense...

  • Page 62
    ... Mexico. The Company incurred additional tax expense in 2014 of $6.9 million related to this settlement. In certain cases, tax law requires items to be included in the Company's income tax returns at a different time than when these items are recognized on the consolidated financial statements or at...

  • Page 63
    ...and tooling purchase liabilities included in accounts payable or accrued liabilities on the consolidated balance sheets as of December 27, 2015. Theatrical Contingencies The table above excludes up to $70.0 million in guaranteed royalties related to the Company's license agreement related to MARVEL...

  • Page 64
    ... U.S. and other International pension plans in 2016. • At December 27, 2015, the Company had letters of credit and related instruments of approximately $24.5 million. The Company believes that cash from operations and funds available through its commercial paper program or lines of credit will...

  • Page 65
    ... shipping schedules. The business of the Company is characterized by customer order patterns which vary from year to year largely because of differences in the degree of consumer acceptance of a product line, product availability, marketing strategies, inventory levels, policies of retailers...

  • Page 66
    ... principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Hasbro, Inc.'s internal control over financial reporting as of December 27, 2015, based on criteria established in Internal Control - Integrated Framework (2013...

  • Page 67
    ... Authorized 600,000,000 shares; issued 209,694,630 shares in 2015 and 2014 ...Additional paid-in capital ...Retained earnings ...Accumulated other comprehensive loss ...Treasury stock, at cost, 84,899,200 shares in 2015 and 85,168,478 shares in 2014 ...Total shareholders' equity ...Total liabilities...

  • Page 68
    ... Statements of Operations Fiscal Years Ended in December (Thousands of Dollars Except Per Share Data) 2015 2014 2013 Net revenues ...Costs and expenses Cost of sales ...Royalties ...Product development ...Advertising ...Amortization of intangibles ...Program production cost amortization ...Selling...

  • Page 69
    ...Statements of Comprehensive Earnings Fiscal Years Ended in December (Thousands of Dollars) 2015 2014 2013 Net earnings ...Other comprehensive earnings (loss): Foreign currency translation adjustments ...Unrealized holding (losses) gains on available-for-sale... to Hasbro, Inc...financial statements. 58

  • Page 70
    ... of plant and equipment ...111,605 105,258 Amortization of intangibles ...43,722 52,708 Program production cost amortization ...42,449 47,086 Deferred income taxes ...(18,954) (9,755) Stock-based compensation ...53,880 36,152 Changes in operating assets and liabilities: Increase in accounts...

  • Page 71
    ...063 - transactions ...Purchases of common stock ...- - - Stock-based compensation expense ...- 36,021 - Dividends declared ...- - (218,034) Distributions paid to noncontrolling owners ...- - - Balance, December 28, 2014 ...$104,847 806,265 3,630,072 Net earnings attributable to Hasbro, Inc...- - 451...

  • Page 72
    ... Per Share Data) (1) Summary of Significant Accounting Policies Preparation of Consolidated Financial Statements The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates...

  • Page 73
    ... allowances for discounts, rebates and returns. Inventories Inventories are valued at the lower of cost (first-in, first-out) or market. Based upon a consideration of quantities on hand, actual and projected sales volume, anticipated product selling price and product lines planned to be discontinued...

  • Page 74
    ... existing trademarks, copyrights, patents, license agreements and other product-related rights. These rights were valued on their acquisition date based on the anticipated future cash flows from the underlying product line. The Company has certain intangible assets related to the Tonka and Milton...

  • Page 75
    ... the related revenues are recognized. The Company bases its estimates for discounts, rebates and returns on agreed customer terms and historical experience. The Company enters into arrangements licensing its brands on specifically approved products or formats. The licensees pay the Company royalties...

  • Page 76
    ...less related provisions for discounts, rebates and returns, as well as royalty, television programming and digital gaming revenues comprise net revenues in the consolidated statements of operations. Costs of Sales Cost of sales primarily consists of purchased materials, labor, tooling, manufacturing...

  • Page 77
    ... deductible. In 2016, the Company expects to contribute approximately $3,600 to its pension plans. The estimated amounts of future payments to be made under other retirement programs are being accrued currently over the period of active employment and are also included in pension expense. Hasbro has...

  • Page 78
    ... Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) provide benefits to such employees following their period of employment but prior to their retirement. The Company measures the costs of these obligations based on actuarial computations. Stock-Based Compensation...

  • Page 79
    ... which the market price exceeds the exercise price, less shares which could have been purchased by the Company with the related proceeds. Dilutive securities also include shares issuable under restricted stock unit award agreements. There were no antidilutive stock options or restricted stock unit...

  • Page 80
    ... the consolidated statements of comprehensive earnings. The following table presents the related tax effects on changes in other comprehensive earnings (loss) for the three years ended December 27, 2015. 2015 2014 2013 Other comprehensive earnings (loss), tax effect: Tax benefit (expense) on cash...

  • Page 81
    ... end of 2015 or forecasted to be made in 2016. These amounts will be reclassified into the consolidated statements of operations upon the sale of the related inventory or recognition of the related sales, royalties or expenses. In addition to foreign currency forward contracts, the Company entered...

  • Page 82
    ..., by operating segment, for the years ended December 27, 2015 and December 28, 2014 are as follows: U.S. and Canada International Entertainment and Licensing Total 2015 Balance at December 28, 2014 ...Foreign exchange translation ...Balance at December 27, 2015 ...2014 Balance at December 29, 2013...

  • Page 83
    ... game releases in 2016, the carrying value of this reporting unit may become impaired. The Company completed its annual impairment tests of goodwill in the fourth quarters of 2015, 2014 and 2013 concluding that there was no impairment of its goodwill. Other Intangibles, Net A summary of the Company...

  • Page 84
    ... 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 the amendment, the...

  • Page 85
    ... related to its restructuring totaling $17,278. The Company also enters into certain other transactions with the Network including the licensing of television programming and the purchase of advertising. During 2015, 2014 and 2013, these transactions were not material. (6) Program Production Costs...

  • Page 86
    ...an agreement with a group of banks providing a commercial paper program (the "Program"). Under the Program, at the Company's request the banks may either purchase from the Company, or arrange for the sale by the Company of, unsecured commercial paper notes. Borrowings under the Program are supported...

  • Page 87
    HASBRO, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) (9) Long-Term Debt Components of long-term debt are as follows: 2015 Carrying Cost Fair Value Carrying Cost 2014 Fair Value 6.35% Notes Due 2040 ...6.30% ...

  • Page 88
    ...) Total income taxes ... $157,043 Certain income tax (benefits) expenses, not reflected in income taxes in the consolidated statements of operations totaled $(5,434) in 2015, $(38,223) in 2014 and $6,733 in 2013 which relate primarily to stock compensation and pensions. In 2015, 2014 and 2013, the...

  • Page 89
    ... at December 27, 2015 and December 28, 2014 are: 2015 2014 Deferred tax assets: Accounts receivable ...Inventories ...Loss and credit carryforwards ...Operating expenses ...Pension ...Other compensation ...Postretirement benefits ...Interest rate hedge ...Tax sharing agreement ...Other ...Gross...

  • Page 90
    ... tax expense. The total income tax benefit from the amended returns, including other adjustments, was $13,480 during the first quarter of 2014. The Company is currently under income tax examination in several U.S. state and local and non-U.S. jurisdictions. During 2013, the U.S. Internal Revenue...

  • Page 91
    ...repurchased will depend on a number of factors, including the price of the Company's common stock. In 2015, the Company repurchased 1,248 shares at an average price of $68.01. The total cost of these repurchases, including transaction costs, was $84,894. At December 27, 2015, $479,283 remained under...

  • Page 92
    ... Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) At December 27, 2015 and December 28, 2014, the Company had the following assets and liabilities measured at fair value in its consolidated balance sheets: Fair Value Measurements Using Quoted Prices in Active Markets...

  • Page 93
    ... stock performance awards for the years ended December 27, 2015, December 28, 2014 and December 29, 2013 was $53,880, $36,152 and $21,272, respectively, and was recorded as follows: 2015 2014 2013 Cost of sales ...Product development ...Selling, distribution and administration ...Income tax benefit...

  • Page 94
    ... 1,560 1,316 21,272 7,065 14,207 Stock Performance Awards In 2015, 2014 and 2013, as part of its annual equity grant to executive officers and certain other employees, the Company issued contingent stock performance awards (the "Stock Performance Awards"). These awards provide the recipients with...

  • Page 95
    ..., as part of an Amended and Restated Employment Agreement, the Company's Chief Executive Officer was awarded 587 shares to be granted in two tranches across 2013 and 2014. As of May 2013, both tranches met the accounting definition for grant date and, as such, are being expensed from 2013 through...

  • Page 96
    ... Grant date stock price ...Stock price volatility ...Risk-free interest rate ...Dividend yield ... $47.28 26.12% 0.65% 3.38% Excluding the aforementioned award for 587 shares, information with respect to the remaining Restricted Stock Awards and Restricted Stock Units for 2015, 2014 and 2013 is...

  • Page 97
    ... compensation cost related to stock options was $6,220 and the weighted average period over which this will be expensed is 20 months. Non-Employee Awards In 2015, 2014 and 2013, the Company granted 20, 34 and 33 shares of common stock, respectively, to its non-employee members of its Board...

  • Page 98
    ... 2007. Following the August 2015 sale of its manufacturing facility in East Longmeadow, MA, the Company elected to freeze benefits related to its major plan covering union employees. At December 27, 2015, the measurement date, the projected benefit obligations of the funded plans were in excess of...

  • Page 99
    ... 2015 2014 Change in Projected Benefit Obligation Projected benefit obligation - beginning ...Service cost ...Interest cost ...Actuarial (gain) loss ...Curtailment ...Benefits paid ...Expenses paid ...Projected benefit obligation - ending ...Accumulated benefit obligation - ending ...Change in Plan...

  • Page 100
    HASBRO, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) Assumptions used to determine the year-end pension and postretirement benefit obligations are as follows: 2015 2014 Pension Weighted average discount rate ...

  • Page 101
    ... that market participants would use in pricing the asset. The Company believes that the net asset value is the best information available for use in the fair value measurement of this fund. Of the activity in Level 3 assets for 2015, $200 relates to purchases of investments, $59,800 relates to sales...

  • Page 102
    ... note 17 for additional information on the 2015 curtailment (gain) loss. Assumptions used to determine net periodic benefit cost of the pension plan and postretirement plan for each fiscal year follow: 2015 2014 2013 Pension Weighted average discount rate ...Long-term rate of return on plan assets...

  • Page 103
    ... all of the plan assets are invested in equity and fixed income securities. The pension expense related to these plans was $2,769, $3,363 and $4,085 in 2015, 2014 and 2013, respectively. In fiscal 2016, the Company expects amortization of $(39) of prior service costs, $1,077 of unrecognized...

  • Page 104
    ... currency requirements related to purchases of inventory, product sales and other cross-border transactions not denominated in the functional currency of the business unit, are primarily denominated in United States and Hong Kong dollars, and Euros. All contracts are entered into with a number of...

  • Page 105
    ...comprehensive earnings to net earnings for the years ended December 27, 2015, December 28, 2014 and December 29, 2013 as follows: 2015 2014 2013 Consolidated Statements of Operations Classification Cost of sales ...Sales ...Royalties and other ...Net realized (losses) gains ... $66,378 (9,219) (566...

  • Page 106
    ...in East Longmeadow, MA and the common stock of the Company's manufacturing subsidiary in Waterford, Ireland. Inclusive of this transaction and other related costs, the Company recognized a gain of $6,573 on the sale recorded in other (income) expense, net in the consolidated statements of operations...

  • Page 107
    ... 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...

  • Page 108
    ... 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...

  • Page 109
    ... uses to manage its business. Net revenues are categorized based on location of the customer, while long-lived assets (property, plant and equipment, goodwill and other intangibles) are categorized based on their location. 2015 2014 2013 Net revenues United States ...International ... $2,278,613...

  • Page 110
    ... the right to market and sell designated classes of products based on Marvel's portfolio of brands, including SPIDER-MAN and THE AVENGERS, and Lucas' STAR WARS brand. Hasbro's net revenues from these licenses can be significant in any given year based on the level of third party entertainment. Both...

  • Page 111
    HASBRO, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements - (Continued) (Thousands of Dollars and Shares Except Per Share Data) (20) Quarterly Financial Data (Unaudited) First Second Quarter Third Fourth Full Year 2015 Net revenues ...Operating profit ...Earnings before income taxes ...

  • Page 112
    ...processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to...

  • Page 113
    ... of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Hasbro, Inc. and subsidiaries as of December 27, 2015 and December 28, 2014, and the related consolidated statements of operations, comprehensive earnings, cash flows and shareholders' equity and...

  • Page 114
    ... the Company's website under the Corporate, Investors, Corporate Governance tabs. The Company's website address is http://www.hasbro.com. Although the Company does not generally intend to provide waivers of or amendments to the Code of Conduct for its Chief Executive Officer, Chief Financial Officer...

  • Page 115
    ... contained under the captions "Governance of the Company" and "Certain Relationships and Related Party Transactions" in the Company's definitive proxy statement for the 2016 Annual Meeting of Shareholders and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services. The...

  • Page 116
    ... to Amended and Restated Bylaws of the Company, as amended. (Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated December 10, 2015, File No. 1-6682.) (h) Certificate of Designations of Series C Junior Participating Preference Stock of Hasbro, Inc. dated June...

  • Page 117
    ... 10(h) to the Company's Annual Report on Form 10-K for the period ended December 25, 2011, File No. 1-6682.) (g) Amendment, dated July 19, 2013, to License Agreements by and between Hasbro, Inc., Marvel Characters B.V. and Spider-Man Merchandising L.P. (Portions of this agreement have been omitted...

  • Page 118
    ... under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.) (Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended September 28, 2014, File No. 1-6682.) Executive Compensation Plans and Arrangements (j) Form of Employment Agreement...

  • Page 119
    ...Appendix C to the definitive proxy statement for the Company's 2013 Annual Meeting of Shareholders, File No. 1-6682.) Form of Fair Market Value Stock Option Agreement under the Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan. (Applicable to Duncan Billing, John Frascotti, Wiebe Tinga and...

  • Page 120
    ... Senior Management Annual Performance Plan. (Incorporated by reference to Appendix D to the Company's definitive proxy statement for its 2014 Annual Meeting of Shareholders, File No. 1-6682.) (ss) Form of Non-Competition, Non-Solicitation and Confidentiality Agreement. (Applicable to Duncan Billing...

  • Page 121
    ... 101.PRE 101.DEF Statement re-computation of ratios. Subsidiaries of the registrant. Consent of KPMG LLP. Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934. Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) under...

  • Page 122
    ... Public Accounting Firm The Board of Directors and Shareholders Hasbro, Inc.: Under date of February 24, 2016, we reported on the consolidated balance sheets of Hasbro, Inc. and subsidiaries as of December 27, 2015 and December 28, 2014, and the related consolidated statements of operations...

  • Page 123
    ... in December (Thousands of Dollars) Balance at Beginning of Year Expense (Benefit) Other Additions Write-Offs and Other Balance at End of Year Valuation accounts deducted from assets to which they apply - for doubtful accounts receivable: 2015 ...2014 ...2013 ... $15,900 $19,000 $19,600 2,400 800...

  • Page 124
    ... undersigned, thereunto duly authorized. HASBRO, INC. (Registrant) By: /s/ Brian D. Goldner Brian D. Goldner Chairman of the Board, President and Chief Executive Officer Date: February 24, 2016 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by...

  • Page 125
    ... Exchange Information The common stock of Hasbro, Inc. is listed on The NASDAQ Global Select Market under the symbol HAS. Annual Meeting The annual meeting of shareholders will be held at 11:00 a.m. on Thursday, May 19, 2016 at: Hasbro's Corporate Office 1027 Newport Avenue Pawtucket, Rhode Island...

  • Page 126
    1027 Newport Avenue Pawtucket, Rhode Island 02861 hasbro.com