Hasbro 2015 Annual Report Download - page 15

continues to grow and promote existing brands by leveraging their strengths across other toy categories. Our
NERF REBELLE and PLAY-DOH DOH VINCI product lines reflect this strategy.
Preschool Our preschool category encompasses a range of products for infants and preschoolers in various
stages of development. In the preschool category, we are focused on our Franchise Brands and story-led
initiatives where we believe we can differentiate our offerings and deliver higher profitability. Franchise 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.
In recent years, we have introduced preschool product lines which complement our girls and boys product lines.
Generally, these product lines fall within our PLAYSKOOL HEREOS and PLAYSKOOL FRIENDS brands and
include MY LITTLE PONY, JURASSIC WORLD, TRANSFORMERS RESCUE BOTS, MARVEL SUPER
HERO ADVENTURES and STAR WARS GALACTIC HEROES. In addition to PLAYSKOOL HEROES and
PLAYSKOOL FRIENDS, our PLAYSKOOL brand also includes well-known core products such as MR.
POTATO HEAD, SIT ‘N SPIN and GLOWORM, along with a line of infant toys including STEP START
WALK’ N RIDE and ELEFUN BUSY BALL POPPER.
Segments
Organizationally, our three principal segments are U.S. and Canada, International and Entertainment and
Licensing. The U.S. and Canada and International segments engage in the marketing and selling of various toy
and game products described above. Our toy and game products are primarily developed by cross-functional
teams, including members of our global development and marketing groups, to establish a cohesive brand
direction and assist the segments in establishing certain local marketing programs. The costs of these groups are
allocated to the principal segments. Our U.S. and Canada segment covers the United States and Canada while the
International segment primarily includes Europe, the Asia Pacific region and Latin and South America. The
Entertainment and Licensing segment conducts our movie, television and digital gaming entertainment
operations, including the operations of Hasbro Studios and Backflip as well as engages in the out-licensing of our
trademarks, characters and other brand and intellectual property rights to third parties for non-competing
products. Our Global Operations segment is responsible for arranging product manufacturing and sourcing for
the U.S. and Canada and International segments. Financial information with respect to our segments and
geographic areas is included in note 19 to our consolidated financial statements, which are included in Item 8 of
this Form 10-K. The following is a discussion of each segment.
U.S. and Canada This segment engages in the marketing and sale of our products in the United States and
Canada. The U.S. and Canada segment promotes our brands through innovation and reinvention of toys and
games. This is accomplished through introducing new products and initiatives driven by consumer and
marketplace insights and leveraging opportunistic toy and game lines and licenses. This strategy leverages efforts
to increase consumer awareness of the Company’s brands through entertainment experiences, including motion
pictures and television programming.
International The International segment engages in the marketing and sale of our product categories to
retailers and wholesalers in most countries in Europe, Latin and South America, and the Asia Pacific region and
through distributors in those countries where we have no direct presence. We have offices in more than 35
countries contributing to sales in more than 120 countries.
In addition to growing brands and leveraging opportunistic toy lines and licenses, we seek to grow our
international business by continuing to opportunistically expand into emerging markets in Eastern Europe, Asia
and Latin and South America. Emerging markets are an area of high priority for us as we believe they offer
greater opportunities for revenue growth than developed markets. Key emerging markets include Russia, Brazil
and the People’s Republic of China (“China”) and, during 2015, we opened offices in South Africa and Thailand.
Net revenues from emerging markets represented 14% of our total consolidated net revenues in 2015. In 2015,
net revenues from emerging markets decreased 9%, primarily due to a challenging foreign currency environment
whereas 2014 and 2013 net revenues in emerging markets grew 20% and 25%, respectively. The strengthening of
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