Hasbro 2015 Annual Report Download - page 16

the U.S. dollar had a significant impact on the International segment during 2015. The U.S. dollar strengthened
against nearly all of our major selling currencies, including the Brazilian Real, Euro, Mexican Peso and Russian
Ruble. The negative impact from foreign currency translation on International segment net revenues for 2015 and
2014 was $379.4 million and $87.7 million, respectively. Furthermore, absent the negative impact of foreign
currency, net revenues from emerging markets grew approximately 15%. Financial information with respect to
foreign currency risk management is included in note 16 to our consolidated financial statements, which are
included in Item 8 of this Form 10-K.
Entertainment and Licensing Our Entertainment and Licensing segment includes 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 not
compete directly with our own product offerings, such as apparel, publishing, home goods and electronics, or in
certain situations, to utilize them for toy products where we consider the out-licensing of brands to be more
effective.
Our digital gaming business seeks to promote our brands largely through the out-licensing of our intellectual
properties to a number of partners who develop and offer digital games for play on mobile devices, personal
computers, and video game consoles based on those brands. We have a 70% majority ownership in Backflip, a
mobile game developer, as we seek to complement the aforementioned out-licensing with the development of
internal digital gaming resources. Backflip’s product offerings include games for tablets and mobile devices,
including the DRAGONVALE game. Backflip intends to continue focusing on its existing game titles,
particularly DRAGONVALE, and to launch new games, including game offerings based on Hasbro brands. To
further extend its brands into digital media and gaming, the Company also out-licenses its properties to a number
of partners who develop and offer digital games and other gaming experiences based on those brands. The
Company has digital gaming relationships with Electronic Arts Inc., Activision, Ubisoft and others. Lastly, we
also license our brands to third parties engaged in other forms of gaming, including Scientific Games
Corporation.
Major motion pictures and television programming based on our owned and controlled brands provide both
immersive storytelling and the ability for our consumers to experience these properties in a different format,
which we believe can result in increased product sales, royalty revenues, and overall brand awareness. To a lesser
extent, we can also earn revenue from our participation in the financial results of motion pictures and related
home entertainment releases and through the distribution of television programming. Revenue from toy and
game product sales is a component of the U.S. and Canada and International segments, while royalty revenues,
including revenues earned from movies and television programming, is included in the Entertainment and
Licensing segment.
Global Operations Our Global Operations segment sources production of our toy and game products.
Through August 2015, the Company owned and operated manufacturing facilities in East Longmeadow,
Massachusetts and Waterford, Ireland which predominantly produced game products. These facilities were sold
to Cartamundi NV (“Cartamundi”) on August 31, 2015. Cartamundi will continue to manufacture game products
for us under a manufacturing agreement. Sourcing for our other production is done through unrelated third party
manufacturers in various Far East countries, principally China, using a Hong Kong based wholly-owned
subsidiary operation for quality control and order coordination purposes. See “Manufacturing and Importing”
below for more details concerning overseas manufacturing and sourcing.
Other Information To further extend our range of products in the various segments of our business, we sell a
portion of our toy and game products to retailers on a direct import basis from the Far East. These sales are
reflected in the revenue of the related segment where the customer is geographically located.
Certain of our products are licensed to other companies for sale in selected countries where we do not
otherwise have a direct business presence.
5