Hasbro 2015 Annual Report Download - page 55

LIQUIDITY AND CAPITAL RESOURCES
The Company has historically generated a significant amount of cash from operations. In 2015 the Company
funded its operations and liquidity needs primarily through cash flows from operations, and, when needed, using
borrowings under its available lines of credit and its commercial paper program. During 2016, the Company
expects to continue to fund its working capital needs primarily through cash flows from operations and, when
needed, by issuing commercial paper or borrowing under its revolving credit agreement. In the event that the
Company is not able to issue commercial paper, the Company intends to utilize its available lines of credit. The
Company believes that the funds available to it, including cash expected to be generated from operations and
funds available through its commercial paper program or its available lines of credit are adequate to meet its
working capital needs for 2016, however, unexpected events or circumstances such as material operating losses
or increased capital or other expenditures, or inability to otherwise access the commercial paper market, may
reduce or eliminate the availability of external financial resources. In addition, significant disruptions to credit
markets may also reduce or eliminate the availability of external financial resources. Although the Company
believes the risk of nonperformance by the counterparties to its financial facilities is not significant, in times of
severe economic downturn in the credit markets it is possible that one or more sources of external financing may
be unable or unwilling to provide funding to the Company.
In May 2014, the Company issued $600.0 million in long-term debt consisting of $300.0 million in 3.15%
Notes Due 2021 and $300.0 million in 5.10% Notes Due 2044 (collectively, the “Notes”). The Company may
redeem the Notes at its option at the greater of the principal amount of the Notes or the present value of the
remaining scheduled payments using the effective interest rate on applicable U.S. Treasury bills at the time of
repurchase. The proceeds from the issuance of the Notes were used, primarily, to repay $425.0 million in
aggregate principal amount of the 6.125% Notes Due 2014 upon maturity, including accrued and unpaid interest.
The remaining net proceeds were utilized for general corporate and working capital purposes.
As of December 27, 2015, the Company’s cash and cash equivalents totaled $976.8 million, substantially all
of which is held by international subsidiaries. Deferred income taxes have not been provided on the majority of
undistributed earnings of international subsidiaries as such earnings are indefinitely reinvested by the Company.
Accordingly, such international cash balances are not available to fund cash requirements in the United States
unless the Company changes its reinvestment policy. The Company has sufficient sources of cash in the United
States to fund cash requirements without the need to repatriate any funds. If the Company changes its policy of
permanently reinvesting international earnings, it would be required to accrue for any additional income taxes
representing the difference between the tax rates in the United States and the applicable tax rates of the
international subsidiaries. If the Company repatriated the funds from its international subsidiaries, it would then
be required to pay the additional U.S. income tax. The majority of the Company’s cash and cash equivalents held
outside of the United States as of December 27, 2015 is denominated in the U.S. dollar.
In 2015, 2014 and 2013, Hasbro generated $552.4 million, $454.4 million and $401.1 million of cash from
its operating activities, respectively. Operating 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.
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